Each player draws and places a monster in the chamber so the player who drew the monster card controls it. Note that he/she doesn't control that monster in particular but activates all monsters of that type during their villain phase. I believe the shield marker is attached to the card so it is possible to kill the monster in the chamber but not remove the card with the shield depending on if there is another same type monster in play and where it is in relation to the active hero.
You replace only one legion devil.
When reading Adventure 5 the rules tell you to kill all the monsters in the secret chamber. The Chamber card tells you to place the shield on the Monster Card as a reminder. I realise the rule book states that if you kill a monster and you don't control it then the first player starting from the player to your left that controls one is the player that gets rid of the card. I believe that rule is for simplicity. Not to actually combine with a chamber encounter to make the game harder.
The creatures in the room are easy to keep track of with the help of the shields to distinguish between them and other creatures already in play. That way you can focus on and kill these monsters to win the game.
I can definitely see that people would play the game the way you have stated as that is basically the RAW. But I think it is not the intention of the designers. Of course this is just my opinion.