Interesting idea, one I like very much. My one and only problem is: in 'Transformers: Dark of the Moon', they made Megatron look weak, having a one-armed Optimus kill him in 10 seconds, that was one of my pet peeves with Ehren Kruger's writing in that movie, actually, every 'Transformers' film after the first one, which I'd say was the only good one in this series, to this day, and I don't see that changing as long as Bay and Kruger are let anywhere near that franchise (which will be forever), funny how the one and only good installment in the series is the only one which didn't feature Ehren Kruger as the writer. Then again, the argument could also be made that he took him by surprise in killing him so fast.
My idea for Destoroyah goes like this: the second film is a remake of Ghidorah: The Three Headed Dragon (with Mothra, Rodan and KG) while the third is a Destroy All Monsters Remake (featuring Anguirus, Rodan, MechaGodzilla, KG revived as Mecha-King Ghidorah and Destoroyah along with a batch of new monsters).
On Monster Island, all the monsters are fighting, when Destroyah, who's now evolved into his final demonic form, arrives and cleans house. Then Godzilla, fresh off fighting his earlier form, arrives and is saddened to see both his friends (Anguirus and Rodan) killed. Godzilla gets PO'ed and tries to fight Destoroyah, but gets manhandled, similar to the first Batman-Bane fight in The Dark Knight Rises (minus the back-breaking, of course). MechaGodzilla, having luckily fleed, then fights Destoroyah in Chicago and puts up a good fight, but is ultimately defeated in the end. So then Monarch, in a last ditch effort to save mankind, attaches MechaGodzilla's reactor core to a wounded Godzilla, who's being held in New Jersey, and feeds him energy from it, giving us a new, "Burning"-esque Godzilla (except with unlimited life force, basically, he keeps going until his heart stops), donning blue ultraviolet rashes in place of the red/orange lava ones (except they turn red when he's about to use his atomic breath, giving us, yes, the famous red spiral beam!), who fights Destoroyah in Manhattan and beats him after an epic battle.