Well, let me tell you some stories.

My girlfriend bought her first airplane in North Dakota (or somewhere
near) from a guy who just got his private license a few years prior. He
had been flying for decades. He had many friends who still had no
licenses. He owned an experimental biplane, which he barnstormed in -
and yes, I do mean he charged money for aerobatic rides. No
commercial, no parachutes, experimental airplane.

I know at least one airline captain who had several hours actual IMC,
on an IFR flight plan, with approaches and all, before he ever STARTED
working on his instrument rating.

There was, until recently, a student pilot based at my home field. In
fact, I soloed him at one point. He was just about ready for his
checkride - and then stopped taking lessons. Didn't stop flying, mind
you. He still flies, and carries passengers. No license. I sweated
this for the first 90 days, but now the endorsement I gave him is long
expired.

My girlfriend bought her third airplane from a guy who owned a Cessna
150 and later a TriPacer. He couldn't get a medical, but it didn't
stop him from accumulating hundreds of hours in the plane. It was not
until he bought an ultralight (which he COULD fly legally) that he
crashed.

This sort of thing is WAY more common than you think it is. I hear
there's an FAA initiative to have 50% of Alaska's pilots licensed by
2010. Based on my estimate of how many there are doing this, I am
surprised there are not more accidents in the NTSB database by
unlicensed pilots. I can only assume they are, as a whole, safer than
the general pilot population. But you asked about consequences. Here
goes.

A friend of mine (in fact, the same airline captain who had more IMC
experience than most CFII's before he got started on his rating) got
his glider license and tow pilot checkout at a little operation not far
from DC. Most of his training was done by an old geezer who instructed
and towed for the operation, but the final signoffs were done by
someone else for reasons that were never explained to him. One day,
the old geezer showed up, pulled out a glider, and asked my friend to
give him a tow. He dropped off about 1500 ft in good lift, and was
soon over the horizon.

Several hours later, they got a call. The old geezer had flown the
glider cross country and had landed - at Dulles International! In his
own words, he "had never been there and wanted to check it out."
Operations were shut down for 30 minutes while they figured out what to
do and got the sailplane off the runway.

The story unraveled. The geezer had lost his medical - and kept
flying, power as well as glider. He got caught (he wasn't exactly
keeping a low profile) and his license was pulled. He kept flying.
And now he was caught again. And what do you suppose the FAA did?
Told him not to do it again. He kept flying after that too.

So it goes.

Michael