Breeding wise, does it gurentee to pass down IV's if so, do I make my Pokemon hold the power item and then once I get a Pokemon with 5 IV's then do I use destiny knot? Or can I use the destiny knot first without worrying about the power items?
By making a breeding Pokemon hold a Power Item, the game guarantees that one of the EVs will be passed down from the Pokemon which is holding it. This one IV depends on which Power Item you've made it hold.