Yes, you are required to have a valid passport to enter Mexico. Passports that have fewer than 6 months remaining on them may de denied by Immigration Authorities.
No, Mexico does not currently require a vaccination card for travel.
No, you do not need a negative covid test to enter Mexico.
No. You no longer need to test to return to the United States.
20 MXN to $1 USD
Yes, you may pay in USD. However, you will not receive the exchange rate of 20MXN to $1 USD. It is up to the establishment to set their own exchange rate. Most are around 16 MXN to $1 USD. To make your money go further, I advise bringing pesos. We order ours through our banking app.
Be sure to keep your tourist visa you receive from immigration with your passport in a safe location. You will need tis form when returning on your flight. If you don't have your tourist visa (FMM) when leaving, you can expect to wait in line at the immigration counter at the airport terminal, complete more paperwork and pay a fine of about $40 USD per lost tourist card.
Yes, Isla Mujeres is very safe and any crime tends to be mostly crimes of opportunity. Don't leave valuables unattended – for example, do not leave your camera or bag in a golf cart or on the beach unattended.
I recommend you join the Facebook group "Islaholics of Isla Mujeres". The are over 22,000 members offering up advice and tips on Isla Mujeres.