I have not been able to find any method that pools use to verify you've done the work you say you did. So if someone does a solution withholding attack but without actually knowing what the solution is in a PPS pool then can't this attack just get free coins?
Miners submit shares to the pool to prove that work has been done. Shares are easier hashes than blocks (by default, one in 2^32 hashes will be a share), and there is no way to find shares without doing the work needed to find blocks. See also What is a share? Can I find it while mining solo, or only when pool mining?
However, a miner can do the work but still refuse to send valid blocks if he finds them. This is called block withholding and can be used in several attacks.
Well, first of all when you submit a share, it gets validated through the BTC/LTC client/daemon. If it is the correct solution to a block, then poof, an incoming transaction of 25BTC / 50LTC appears in the pools transaction history. This is called an "immature" transaction.
Most of the pools run PPS / PPLNS as a reward system. Meaning the more shares you submit, the more payout you get in proportion to the total number of shares during a round. Most pool software use some kind of database to insert the valid shares into to keep track of the work done for each worker/miner.
As far as I know, you get no "special" reward for finding a block... If you do, that's some pool-sided setting. Some pools use PC games as rewards for finding blocks, etc etc. But you don't get some kind of increased LTC/BTC.
If you mean that you withhold the valid share, and then submit it locally so only you get the full rewards? That won't work either, since you need your local bitcoin/litecoin daemon to run, and fetch work from. If you submit a share you haven't got work for, to another litecoin/bitcoin daemon, it won't get accepted, since the server knows that they haven't issued this work to you.
Hope this answers some questions.