Godzilla vs Megaguirus, while using the same suit as Godzilla 2000, does not share continuity with that film. Rather, it is a direct sequel to the 1954 film, but with some liberties.
The film begins with a retelling of the events of the first film, but with the new suit. The major change is there's no mention of the Oxygen Destroyer, indicating this Godzilla merely retreated.
Then Godzilla returns in 1966, and attacks Japan's first nuclear power plant. Japan then must created a new energy source called plasma. This attracts Godzilla in 1996 where the science institute developing the technology is destroyed. What sets this film apart from other Godzilla films is this Godzilla is indicated to be the same as the 1954 monster, rather than a successor. After these events, a special section in the JSDF is formed called the G-Graspers with the mission of combating Godzilla. They create a black hole gun called Dimension Tide to destroy the monster. During a test firing, a prehistoric dragonfly comes through a worm hole and lays a egg. Out of the egg comes meganulon. These creatures were featured in 1956's Rodan. The meganulon molt and become meganula which fly. These meganula feed off of Godzilla and transfer his energy to their queen which turns into Megaguirus, a giant dragonfly capable of taking on Godzilla.
Godzilla and Megaguirus fight until Godzilla emerges victorious. Godzilla goes onto destroy the rebuilt science institute where a secret plasma generator has been stored. The G-Graspers use Dimension Tide against Godzilla to seemingly success. In a series first, an after credits scene features an earthquake accompanied by Godzilla's roar revealing even a black hole can't defeat the king of the monsters.
The honest truth is not a lot can be said about this movie. It's a very typical, middle of the road Godzilla film. Not much is inherently bad about it, but there's not much that stands out either. There still is few moments of note. Such as an interesting shot of a characters climbing on Godzilla's back to plant a tracker. Which we rarely get to see human's that close.
Characters are decent. The lead is a female soldier who wants revenge against Godzilla for killing her superior officer. The other lead is a young scientist who is brought on to reduce the size of Dimension Tide. He flirts with her a little. She responds coldly. She's a live action Tsundere. The fights are competent. They do contain a few Showa style moments like a body slam by Godzilla. This is due to the director, Masaaki Tezuka, being a big fan of King Kong vs Godzilla. Overall, it's just a basis, but enjoyable Godzilla film.