American Mu had kept her rivals guessing over whether she would turn up in Hungary after her coach, Bobby Kersee, last month suggested she may skip the World Championships.
But the 21-year-old, who forced Hodgkinson to settle for silver in Eugene last year, won her heat in one minute 59.59 seconds in Budapest on Wednesday.
Former Leeds Beckett University student Hodgkinson eased into Friday’s semi-finals after winning her heat in one minute 59.53 seconds and is eager to take another shot at Mu.
“Yeah, I saw here in the warm-up. It’s good that she’s here. Hopefully all three of us (Hodgkinson, Mu and Mary Moraa) will make it to the final and it will be a good race,” she said.
“I was just jogging and she passed me and I was like ‘oh, she’s come’ because nobody knew. That’s the first time I knew, I knew she was on the start list. I didn’t know she was here.”
Hodgkinson also had to contend with temperatures over 30 degrees at 10am in Hungary.
World Athletics had already moved the women’s 5,000m heats to Wednesday evening because of the soaring heat and Hodgkinson admitted it has been a battle.
She said: “The conditions are awful. Mixed in with the 6am does not bode well for me.
“I’m glad it’s the only morning round. I like to be back at 12 and done but I also like my sleep.
Wakefield Harriers runner Amy-Eloise Markovc finished 11th in the heats of the 5,000m. Her time was a season's best but not enough to advance.