There is nothing confirmed about a sequel at all. Everything that Gareth said are things he would like to explore, but they are not actually part of anything because a sequel is not yet in the works. They're going to wait until this film has made its first impression before they even think about making a sequel.
If they do make a sequel, it's going to be interesting to see what they actually go with. But as for the things you said, let me clarify a few things for you:
"1. its going to have a monster island setting to it (so monster island exists?)"
Again, this is somethign Gareth said he'd like to explore. That doesn't mean it's actually going to be in it.
"2.its going to have a destroy all monsters theme to it (so theres gonna be lotsa monsters in the sequel?)"
This is a misinterpretation of information, and no, Gareth never said anything about the Destroy All Monsters theme or storyline. Gareth said he wanted to explore the Monster Island concept from DAM, he didn't say anything about the movie's own plot or story in any way. Everyone who said he wanted to do a Destory All Monsters sequel misquoted him and misinterpreted his exact words.
"3. hedorah will return but this time he's born from a nuclear power plant incident (hedorah,really?)"
This is completely false and would never happen even with Banno's involvement if he returns to be an Executive Producer on a sequel if one comes around.
"4.theres gonna be another monster called mitodah an "earth saving monster" (no comment)"
This is also completely false and was only ever a rumor.
Gareth Edwards has admitted that his favorite Godzilla movie is Destory All Monsters, not Godzilla vs. Hedorah, just as one final correction.
Anyway, it's nice to see you involved and trying to help flesh things out. But right now the sequel is not even on the table yet. Gareth himself has said that he's waiting to see how the film does before a sequel even becomes an option. If it does, then we have a lot to look forward to and a lot to speculate on.
Right now, a sequel could have anything. Is it going to have a Monster Island in it? Maybe, if Gareth sticks to his previous desire to explore the option. Will it have more monsters? If the reception of the Muto's and Godzilla himself is high enough, then most likely. Will it have Hedorah? Absolutely not. Banno said he's working on putting together a Godzilla vs. Hedorah 2 movie, but it will have no link to Godzilla 2014 here in America.