Ya, it's true but I wouldn't recommend it unless it is with an old tama that you don't care about losing. There is a website somewheres that shows you exactly how to do it but I dont remember the link. Maybe someone else could post it.
Mizutamatchi can go into a Kuchi teen. I don't think that it necessarilly needs to have high kindness points. I think it is more random than anything but to increase your chances you should maybe try to get high kindness anyway and don't take perfect care of it. The kuchi family is hard to get...