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The Circus believes Polyakov and the secret source high up in Moscow Center to be genuine double agents spying for them. In order to "protect" Polyakov (as the legitimate asset they see him) from being caught by Russian counterintelligence, cover is provided for the various meetings by fabricating the notion that Polyakov is just a garden-variety Russian spy cultivating contacts and returning with (low grade) intel as payoff so as to avoid any suspicion he is anything other than loyal to the Motherland. The intel is to make Moscow Center believe the illusion (as the Circus sees it) that Polyakov is a routine spy loyal to them.
The reality tearing this complacent Circus view to shreds is Polyakov is indeed loyal and only pretending to be a double agent, in sync with Moscow all along subverting the safe house operation as cover to securely retrieve files from Haydon under the noses of the Circus.
1) Esterhase makes an oblique reference to it just as the plane is landing - easy to miss:
<blockquote>Moscow thinks Polyakov's working for them, so, every now and then we give him the odd file to take back to them chicken-feed, just to keep his bosses happy. But Polyakov's our Joe, part of a big operation ...</blockquote>
Toby's explanation in the book (Ch. 34):
<blockquote>“Come on, George,” Toby said. “You’re not a child. Think how many operations we ran this way. We buy Polyakov, okay? Polyakov’s a Moscow hood but he’s our Joe. But he’s got to pretend to his own people that he’s spying on us. How else does he get away with it? How does he walk in and out of that house all day, no gorillas, no baby-sitters, everything so easy? He comes down to our shop, so he got to take home the goodies. So we give him goodies. Chicken-feed, so he can pass it home and everyone in Moscow claps him on the back and tells him he’s a big guy—happens every day.”</blockquote>
The files are meant as cover to deceive Moscow into thinking Polyakov is obtaining intel for them, while supposedly giving Witchcraft "treasure" to the Circus. The irony of course is that Moscow turns the tables on the safe house operation, securely gathering prime info from Haydon while distributing glitter/chickenfeed to the others.
2) In the book (Ch. 37) Smiley summons all the main players in various states of shell shock to the safe house bust:
<blockquote>At some point Smiley reappeared from upstairs and mentioned Tarr. Alleline phoned the Circus and dictated one telegram to Paris saying that he could return to England with honour, whatever that meant; and a second to Mackelvore [Paris section chief and who had initially talent spotted Tarr as a scalp-hunter over a decade earlier in Malaysia] saying that Tarr was an acceptable person, which again seemed to Guillam a matter of opinion.</blockquote>
Probably reinstalled into the Service - but not again in Le Carré world as far as I'm aware.
Jim's surrender of Control's code under torture is, at that point, inconsequential for Karla. Control has been deposed and discredited with no way back, a beaten docket - vanquished through the coup engineered out of the shambles of Operation Testify. Telling that Karla's reaction to what should have been a triumph was an underwhelming couple of seconds thought about the code and offering Prideaux a cigarette. The discursive two-way nature of the interrogation confirmed Prideaux's suspicion of a high up mole both from the quality of tittle-tattle and detailed knowledge of Control's service flat. You'd have to assume Karla's loquacity was very much intended as a prelude to Prideaux's imminent mortality in the ruthless manner of Irina, Boris and Lvlov to ensure the knowledge would die with him. Reading between the lines only Haydon's strenuous objection saved Jim.
I should say it's likely Karla already had the Tinker Tailor code from Haydon's contact with Prideaux before the mission (though there's more support in the book than the TV version for this).
Think it's intended purely to improve the grip and solidify the toy as a bluff. Prideaux's come unarmed on the mission (unlike the book) and improvises resourcefully, if pre-Macgyver ... a bit lamely. Disarming the taxi driver by hand, putting that real gun down and then threatening him to exit with the toy placed against his neck does take some chutzpah!
What's interesting is the taxi driver dressed as, and believed to be Prideaux is shot dead immediately - not resisting in any way. It looks decidedly premeditated and that, initially, Karla never had any intention to spare him as agreed with Haydon.
It's an anglicisation of the Hungarian Esterházy/Eszterházy (Ester-haa-zee) so, in origin, phonetically closer to Guinness's (Ester-hey-zee). Toby is ambitious to ingratiate himself within the Circus - adopting the more native sounding 'Esterhouse' is likely, he would believe, to assist in his assimilation.
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