That said, rented hash does come with the possibility of reducing luck since the actual rig owner no longer has a stake in the pool payout (only the renter does). Using the West/NiceHash as an example (only because I'm most familiar with them - not because of anything specific to them), the rig owner selling hash to West/Nice has no incentive to actually submit block solves since they are being paid PPS. They could withhold block solving shares without penalty. In fact, they have incentive to not submit solves since it helps keeps difficulty lower and indirectly their PPS rate higher! The renter, who has the actual stake in the pool, has no way of knowing a block was withheld and pays for the broken hash. It is a risk that has kept me away from renting hash every time I've considered it.
You have described a risk that is inherent in any rental system, and one I have written about previously. The owner of the gear has no incentive whatsoever to actually solve blocks. He's getting paid as long as the hash rate he's providing is consistent with expectations. For example, on MRR, the rig owner sets a price per GH/s of hashing power, and if you decide to rent his gear, you pay the set price. As long as that gear performs well (basically over 90% of advertised rates), the rig owner receives the payment (minus MRR fees). Why should the gear owner care if you solve blocks? He's been paid, so it doesn't matter.
Now, as a rig owner, and one who rents his gear out on MRR, I have every incentive to actually have my gear using proper mining software (my S3s are all updated with kano's latest cgminer 4.9.2). Why? Because when my gear isn't rented, it's pointed towards my own p2pool node, or to ck.'s solo pool. I absolutely want to be able to solve a block
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