You can also administer carcinogens to cause the specimen to develop cancer on its own, without the need to culture and graft the cells. Based on the type of carcinogen and where/how it is administered you end up with different types of cancer.

Back when I was in grad school one of my colleagues injected a carcinogen via catheter to promote bladder cancer for example.

As to your questions about ethics: in my experience at least yes, researchers take the ethics of what they are doing extremely seriously, and the university has an elaborate oversight and approval system which monitors for ethical lapses. We were taught that an animal could only be used if there was no other way to collect the data we needed, and that the study should always be designed to minimize the animal’s suffering