donut: depending on what bullets you're referring to, there are ways to destroy them.
- if you use a Laser-type ship, your laser goes through small destructible missiles (examples: Stage 1 boss' frontal shots after it has lost its side satellites; Stage 2 boss' side gunners)
- in stages 3 and 5 (and 2, before the tank midboss), certain enemies clear the bullets on the screen when they're destroyed; the more bullets they clear, the more points you gain
now, about chaining, there's one chain meter at the upper-left side of the screen, above your chain counter. It's a bar that goes down when you're not destroying/lasering enemies, and going up when you destroy enemies (either by shooting or lasering). If you're lasering enemies, the bar goes down up to a limit (the reason you see people avoiding -- most of the times -- the Power Up item before the midboss in stage 1, is because picking it will interrupt your laser, and most of the times this will interrupt your chain). When the lasered enemy is destroyed, the bar goes up a bit just like it would normally go after destroying an enemy. Chaining, say, 50 hits twice will yield less points than one chain of 100 hits. Boss Hits don't count (if I haven't said it already) for the 2nd-loop criteria.