This is such a jaw-droppingly absurd claim that it simply must be addressed.
Cell differentiation and cell signaling (and developmental biology, for that matter) are VERY hot areas of research right now, and for good reason. We still don't totally understand how the massive sequence space of DNA is regulated to ensure proper cell migration and differentiation into the host of incredibly localized and specialized progenitor cells than then bud off as needed to renew and repair the body, but is is known beyond the shadow of a doubt that embryonic stem cells ARE more flexible than adult stem cells, and, indeed, since embryonic stem cells give rise to adult stem cells, they can be manipulated to do anything and everything that adult stem cells--any adult stem cells--can do. Saying that embryonic stem cells cannot do what adult stem cells can is tantamount to saying that time is not linear, the universe does not operate according to logic and reason, and that science is no different than astrology, fortune-telling, or examining entrails. I'll say this again: If embryonic stem cells are found to be unable to be manipulated into a state where they can do anything which adult stem cells are capable of, then I will immediately stop believing in science entirely.
Now, obviously there has been more success with adult stem cells than embryonic, but this is actually because the latter represents a less flexible and less powerful tool. Adult stem cells are capable of limited feats of mobility, differentiation, and growth, and they do this according to the commands of a more limited set of signals. It's akin to giving a child a hammer versus a universal pneumatic driver--while the latter is certainly a more powerful and versatile tool, until they can understand how to work it, the hammer is actually safer and will be more productive for them in the short term. However, the long-term promise of ES cells is practically limitless. The issue with oncogenesis which you touched on earlier is obviously a big deal, and further understanding of the cellular signals which coax stem cells into growth, division, differentiation, and metastasis is clearly needed prior to any clinical work. Indeed, part of the reason why clinical benefits to ES research have been so slow to come has been an understandable concern about the safety of these methods. No one wants to rush a potentially groundbreaking cure out the door before it is fully understood, only to find out about the side effects later! Indeed, most scientists rightfully condemn those irresponsible companies which sometimes choose to play to the public, release their work early, fast-track it into clinical trials, and later discover problems--which, of course, lead to the entire scientific community taking the heat. As such, ESC work appears to progress more slowly than work with adult cells, simply because as the power and versatility of the technique increases, so must our knowledge and predictive abilities be greater in order to responsibly shepherd it.
To put it into simpler terms: Let's say that you're leading a group of paratroopers into WW2 Germany. You see a tank factory ahead, with Nazi tanks rolling out steadily and wreaking havoc on the front lines. You send two men in: One man is sent to stop a tank, and the other is sent into the factory itself. After a few minutes of figuring out how the tracks, guns, etc work, the first man manages to blow the treads off of a tank, and moves on to another. Meanwhile, the guy on the inside is still trying to work out how all of the machines work, and which levers control production. That is where we are at right now with stem cell research. Once the man on the inside manages to work out how to stop production (and not, say, accidentally crank it up), the gains from that act alone will far outstrip any tank-destruction that is taking place on the outside.
But more knowledge is needed to make this breakthrough.
As a scientist working in the field, I wholeheartedly agree. However, I would implore the general public not to make the assumption that scientists are operating in a moral vacuum with no thought to the ethical consequences of their research. Scientists are no less moral than the general populace, and, in fact, I would even say that they tend to be more so. Also, recognizing the potential problems posed by such powerful new knowledge, any research institute worth its salt has an ethics committee to ensure that all research is done in an ethically and legally satisfactory manner, animals are not mistreated or needlessly sacrificed, human patients have full confidentiality, information about the trials in which they are participating, and risk is minimized, etc.
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