On a trip home, via Singapore and Adelaide, Customs officers located two packages, containing 1.729kg of pure heroin, sewn into her hand luggage.
Hudson denied she was a drug courier, questioning how anyone could have smuggled $5 million worth of heroin past authorities in Cambodia and Singapore.
Jurors found her guilty on the basis she had sewing skills and had no accommodation booked in New Zealand - despite her intention to stay with her family.
Hudson appealed against her sentence, saying penalty was "manifestly excessive" given her good background and lack of prior offending.
On Thursday, Justices Kevin Nicholson, Greg Parker and David Lovell granted Hudson's appeal and reduced her head sentence to eight years.
They further ordered that, upon her release, she abide by the conditions of a two-year, $500 good behaviour bond.