What you're looking for is commonly called "Event Bubbling".
You may refer to the Apple docs here: https://developer.apple.com/library/ios/documentation/eventhandling/conceptual/eventhandlingiphoneos/eventhandlingiphoneos.pdf (Read the Event Delivery: The Responder Chain Section)
So your basic instinct was right, you in fact do need utilize
hitTest:withEvent:, but you can further customize things by hooking up into the Responder chain. That section has a very neat example.