I applaud you for quarantining your fish. It makes things so much easier on the fish as you won't stress the heck out of them by removing them to another tank. Here are some of my opinions I have on the subject.
So to answer a few of your questions. First of all quarantine tanks should only be run while you have fish living in them. After the fish are done being quarantined the tank and all the supplies that went into it should be cleaned with a dillute bleach sollution to kill all the bacteria. Everything should be allowed to air dry and should be stored until you need to quarantine again.
About cycling. This really can be up to you whether you want to go through the trouble of cycling. If you are going to be using any antibiotics that could kill the beneficial bacteria I would not bother cycling the tank at all and would just use frequent water changes to keep the water in good shape. Most of the time you will not be using anitbiotics that could interfere with the nitrogen cycle. I like to use sponge filters for quarantine tanks and I always keep a few in the sump of my display tank that way you can seed the quarantine tank with a bacterial filter that is already established. something like this is what I am talking about
http://lib.store.yahoo.net/lib/yhst-85300140756196/aquarium-sponge-filter.gif
I have found that the ammonia alert moniters made by seachem are very useful and are very cheap. That way you can tell when you need to do a water change.
http://www.drsfostersmith.com/product/prod_display.cfm?c=3578+4345+4387&pcatid=4387
You are probably better off not using any live rock or anything like that, especially if you are going to be using copper as the rock will be ruined and can actually absorb the copper, which will minimize its effectiveness. I like to put a few cut up pieces of pvc in the tank myself. Also, I avoid using any sort of sand or any other substrates in a quarantine tank. This is because it makes it more difficult to clean. Unless the fish had special needs for sand, such as it it being a burrower, I would not use it. In that case I would not use calcium carbonate based sand.
There are more than one way to set up a quarantine tank and I vary the procedures a little depending on what fish I have and what the problem with it may be.
The main thing I want to empasize is cleanliness. I would probably buy a hang on cartridge filter and rinse it off frequently to minimize waste accumulation. I would fill the tank to near capacity as well, 5 gallons is a very small amount of water. Also, what about temperature? Have you got a heater and a good thermometer?
sorry to rant so much. hope this helps.
