Only the recruit account gets levels to grant. So deleting any toon on the vet account doesnt mean anything.

However since the levels are granted from the leveled toon on the recruit account back to a toon on the vet account you will loose any gained levels if you delete that toon prior to granting the levels. Now once you grant the levels you can delete all you want.

To grant levels you must have the recruit toon that has levels to be granted logged on and in a party with a toon from the vet account you wish to grant levels to. I think I also read somewhere that they have to be in close proximity to one another, however this may not be the case.