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Most PPC's will track referrer information, so if your competitor loses tons of cash on useless traffic you forced to his listings, all he needs to then do is complain to the PPC.
Most of the bigger PPC's will happily investigate the traffic and see it was coming from a dodgy source, or if all the traffic that came from referrer X "clicked" on listing #7 etc, there are a million ways to identify when someone is being screwed.
Some PPC's will also only charge for uniques, rather than all those raw hits that you've fed to the listing.
At any rate, if you're willing to go through the trouble of geo-filtering traffic that you can incentivize to ruin your competitors PPC campaign, you are close enough that you may as well just incentivize them to signup through your links ;)
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