Can you use Polymorph Any Object to make members of a species? Lets say hamsters to Orcs or some such. They would have their "capasity" for thought appropriately increased correct? Train them and they would be true orcs, correct?
That is correct. You gain the mental abilities of the new form as well. Of course, they won't be true orcs though, as their type will still be animal. To change types you need shapechange.
I'd say no, they wouldn't quite breed true. After all, when a silver dragon polymorphs into human form, its children are half-dragons. Breed orcs with 'morphed hamsters, and you might wind up with a bunch of rodents who get +2 Str, -2 Int, -2 Cha, and Darkvision. (Breed two 'morphed hamsters with each other, and I'd say the children are hamsters. I bet that'd be hard to explain to the rest of the tribe. )