1. There are two methods to generate mice with ES cells: a: inject ES cells into normal blastocyst embryos and generate chimeric mice (嵌合体), breed these chimeric mice and obtain ES-cell derived mice through germline (生殖细胞) transmission. People have tried this method with iPS cell, they form chimeric mice, but don't go through germline. b: inject ES cells into tetraploid blatocysts (obtained by chemical treatment). Cells in these tetraploid blastosyst will not contribute to the embryo proper (eventually the actual animal), but extraembryonic tissues such as the placenta and amniotic cysts, therefore the mice obtained this way are derived purely from the ES cells and no breeding is needed. This is what the two groups in China did.

2. You misunderstood the terms "totipotent" and "pluripotent". Only fertilized eggs are totipotent as they can form both the extraembryonic tissues and the embryo proper. ES cells are pluripotent, meaning they can form any tissues in the animal body, but not the extraembryonic tissues. iPS cells has been shown to be pluripotent to a certain degree, using teratoma assays. The two studies from China firmly established the pluripotency of iPS cells. On the other hand, iPS cells seem to have problems and are not equal to ES cells.