KT:
My suggestion is for you to stop-over at Himeji Castle on your way to or return from Hiroshima, tour Hiroshima's City center, Peace Memorial Park, the Atomic Bomb Museum and Miyajima Island. Himeji is the BEST near-original castle in Japan.
If your arrival in Hiroshima is mid-day, you can then tour the City's Center, Peace Memorial Park and Atomic Bomb Museum (must see). Then decide if you want to over-night in Hiroshima or on Miyajima Island. If you over-night in Hiroshima, tour Miyajima the following day before heading to your next City stop.
If your budget allows you to spend somewhere between 15,000 to 20,000 yen per person, consider staying overnight on Miyajima at a Ryokan (Japanese Inn). Dinner and Breakfast are generally included for this price. Staying at a Ryokan on the Island is a pleasant Japanese experience. I assure you that this will be one of the highlights of your trip. We've stayed over-night there three times with the last being May of last year.
We always walk down to the waterfront by Itsukushima Shrine where you can view their beautiful sunset and the red-orange Torii Gate in the water from the point/corner where there's a scattering of pine trees. Standing by the shrine and facing the water, it's the point/corner on the right side.
Walk up to Momijidani Park. Just before you reach the entrance, you'll find Iwaso Ryokan. This is where we stayed two of the three times we've stayed there. Near the front of the Ryokan is a small red bridge leading to the Park. Spend a few photo shoot minutes around the bridge and enjoy the peace and tranquility of the environs. Near the front of the Ryokan on the right side of the bridge is a path leading to the stream.
For a brief intro to Ryokans on the Island, browse this site
http://www4.ocn.ne.jp/~miyayado/e_nl-map.html#17 on the map is the location of the red bridge and Iwaso Ryokan. Browse Iwaso Ryokan's website and you'll see photos of the Shrine and the red bridge. If you decide to stay at the Ryokan, be sure to wear your yukata and enjoy hot tea on the lanai or by the window during early sunrise.
If you have a JR Rail Pass, be sure to catch the JR Ferry since the Rail Pass covers the fare.