The diagram is helpful, and the answers you seek depend more on that other router, I think.
Most everyone who wants to do what you are looking for would take the cable from the ISP and plug it into the WAN port of the Mango, and plug the LAN port of the Mango into a LAN port of the other router, and disable all the routing functions of the other router to make it a dumb switch/AP point. The Mango would do all the routing, DHCP, etc. Then its wireguard server would allow access to the internet but not to its 192.168.8.xx LAN; that behavior would depend on that setting. Your internet speed from the LAN would be limited to the 100mbps ethernet port of the Mango, and of course your internet access through the wireguard server would be limited by the Mango’s processing power and the upload speed of your ISP connection, in any case. It’s a lot to ask that little puppy to do.
The way you have it set up, the Mango’s wireguard server will allow access to its WAN side but not its LAN side. It sees 192.168.5.xx as the WAN side, which is why you have access to all the devices on the other router’s LAN side. That is the intended behavior when, for example, you have OpenVPN or WIreguard servers set up on another internal device. To block anything other than 192.168.5.1 (I assume that is the default gateway) you are going to have to mess with that router’s IP tables to drop any connections from the Mango WAN IP to anything other than the default gateway. Even then I’m not sure the other router’s loopback won’t kick in. Alternatively, you might be able to fool with the Mango’s IP tables to drop anything from the wireguard server to anything other than the other router’s default gateway. That would require digging into LUCI.