Well, it's possible that such a fanfic exists. However, without actually scouring every single MLP - related fanfic site, it's hard to say for certain. Maybe it was created by a very creative individual who wanted to combine the rather unexpected elements of Godzilla and MLP. But again, I can't confirm its existence without further research.
Well, it could mean a whole new generation of Mutos. Maybe they would be stronger or have different abilities. It might also change the power balance in the Godzilla universe. For example, if the baby Mutos are aggressive, they could start attacking other creatures more often, causing chaos.
Godzilla also has a certain level of durability. In the MHA world, quirks that can penetrate or bypass such extreme durability would be highly valued. On the other hand, Godzilla's presence could inspire the development of new support items or quirks that are specifically designed to deal with large and powerful threats like him.
Kaiju novels often portray kaiju as gigantic and powerful beings. They are usually depicted as forces of nature that are difficult to control or defeat. For example, in 'Godzilla' novels, Godzilla is shown as a nearly indestructible creature with its atomic breath and massive size.
The Kaiju No. 8 manga is mainly about a character's struggle and growth in a kaiju-infested world. It has elements of action, adventure, and mystery. The plot keeps you on the edge of your seat with unexpected twists and turns.