You're right about the fatter hogs. I saw this process done on an Andrew Zimmern Bizzare Foods. Seems like they did it up in PA and I'm pretty sure is was a heritage breed hog. They took the fat off down to the flesh and left it attached to the skin, cut it up into smaller pieces and started cooking in last years lard. Periodically they'd take out some of the new lard that was growing in the kettle and keep cooking till the skins were crispy. Then take them out and add more and continue the process.
I've also seen it done where they start the process in boiling water and let the lard cook out and then as the water boils off it's replaced by the lard.