I'd suggest giving the LP for completing the process. IE, when you place a hide into a filled and "barked" tub or for adding the appropriate ingredients while the hides are in the tub. If that's too much programming, require the steps to be done in a linear manner. Water, bark, hide or whatever order you desire. That's just me. Thankfully, I don't have to code it.
I also think adding LP throughout the process is the way to go, BUT it needs to be given out only for irreversible steps. Hide can be removed before it's done so you have a big exploit if just putting in hide gives LP as you can 'do the hokey-poky'. The addition of water and bark along with removing finished leather are irreversible and prevent any possible exploits.
Alternatively Jorb could add an actual 'work' step with hourglass and all and put all the LP on that, it could work like follows. When you have tub full of water/hide/bark instead of the reaction actually beginning it is merely ready for the final step, any player clicking it will begin a stirring animation and hourglass clock (like making glue in a cauldron) when done the player will receive their LP and the reaction will have begun, the tub will look a little different (bubbles on the surface?) to indicate it is in the final stage and no more LP can be gained. By putting this step right after most of the drudgery of hauling water/bark the player who dose the work will be able to gain the LP which would provide a good incentive for leather production while avoiding any real LP stealing possibility. To balance the hourglass timer the number of water buckets could be reduced as well so total production time is not significantly changed, or the tub size increased as I described earlier which has much the same net effect.
P.S. While I've never skinned a bear always assumed bears gave one 2x2 'bear skin' as they certainly LOOK like the whole bear skin. I just found it odd that 4 is the maximum size of skin which isn't nearly enough of a size difference with the smallest 1 leather from a rabbit, 9 seems like a much better size ratio.