what could go wrong with a pitted barrel?
Will this affect accuracy only? or Will it cause reliability problems also?

Pitting in the chamber WILL effect reliability.  Pitting in the bore can effect accuracy, and if it gets bad enough barrel integrity.

This is why one should go chrome lined........

Is there a remedy to barrel pitting?

Quoted: Is there a remedy to barrel pitting?

Yes get a new CHROME LINED barrel.

Once it's pitted there is anything you can do other than clean it frequently to keep the pits from getting  bigger.

I have an old mauser with a barrel that looks like a old sewerpipe with stuff growing in it...shoots great,  I also have non chrome lined FALs that are probably 40+ years old...I don't  worry about having a pristine barrel anymore...they all shoot fine.  I'm not a particularly great shooter, but I had a G1 kit gun shoot 3 rounds under an inch at 100 yards with iron sights.  It's never had anything but 20+ year old ammo in it and shoots great.  I can't shoot like that all the time, but apparently the gun is more capable than me.  Shoot it, clean it, and shoot it some more.

Quoted: I have an old mauser with a barrel that looks like a old sewerpipe with stuff growing in it...shoots great,  I also have non chrome lined FALs that are probably 40+ years old...I don't  worry about having a pristine barrel anymore...they all shoot fine.  I'm not a particularly great shooter, but I had a G1 kit gun shoot 3 rounds under an inch at 100 yards with iron sights.  It's never had anything but 20+ year old ammo in it and shoots great.  I can't shoot like that all the time, but apparently the gun is more capable than me.  Shoot it, clean it, and shoot it some more.

While I am aware that there are some unlined, new production FAL barrels out there, I"ve never seen an issue FAL barrel that wasn't chrome lined.  Where did yours come from?

From my understanding the G1, and Stg58 are not chrome lined.  My DSA SA58 carbine is not chrome lined, but Imbels are.  I don't know about the argys, or Belgiums, or the inch type.  G1's are often noted for having the worst condition barrels, they were made for the germans, who them gave them to the turks...then the kits ended up here. They are also often noted as being some of the best shooters.