''I am working slowly but surely, spending hard earned money to legitimately obtain my CPL/IR. I've wanted to fly professionally from being a kid but not once has the thought crossed my mind to invent my hours or experience.''
Unfortunately manxcat, not everyone has the same integrity as you. This industry is perceived as being romantic and glamourous and although it tends to attract the dreamers and Walter Mitty types which generally are harmless, it also attracts the dishonest and unscrupulous who will do anything to get ahead and try and beat the system. These people are a danger. It's not for no good reason that the system requires high levels of experience and licensing. Someone has already mentioned the character Dudley from Ernest Gann's autoibiography, ''Fate is the Hunter". Dudley go into a position of trust with a forged licence and logbook and eventually ended up killing some of his passengers.
I have only experienced two people with forged hours and in both cases they were sumarily dissmissed on being found out. But I have heard of others and some who even boast of their "P51'' hours - that's Parker 51 and not Mustang. In these cases. I would have no compunction in reporting them. Not only are they licenced beyond their ability, they are untrustworthy and dishonest. If they show such a lack of integrity with something so important, how are they going to behave in other circumstances which they may decide aren't so important as to warrent their full honesty.
As for the fake RAF Pilot, I'm amased he found further employment. I know my company wouldn't take him. What does it say for the airlines that have?