Hi ridergirl, thankyou so much for that, it helps me a lot! I will also answer them here for you ;)
Ok, your first question about starting out in pencil, yep ;) I work in a fairly soft lead before I start any piece, marking in the stand out shapes and highlights of the subject on the paper. From there, I will begin blocking in the underlying colours of the subject and work from there. You will end up covering all traces of pencil in the end.
As for where the shading and detail goes without a reference photograph, it is all about studying your subject. Say you're drawing a horse, try to look at as many horse photo's as you can and really study how the muscles and bones are structured. You eventually become some familiar with the basic structures and muscle layouts that you can improvise from your mind into the drawing. I draw primarily from a photograph due to my line of work, but often I am sent very bad quality images that do not show much detail at all, or one of the animal's eyes is in total shadow thus removing all trace of detail. To combat this, it is as I said above, all about studying the subject and working it out on your own, until you can take a step back, look at your drawing and be happy with the proportions. Compare it to a photograph of a horse that is in a similar stance to the horse you have drawn to help you determine whether you have your proportions correct.
Making the picture look real... hmm tough. LOTS of practice, I can't stress how much practice you must put in to get enough detail to make a portrait look lifelike. The eyes are the most vital part of drawing an animal, as the eyes are the window's to the soul. If they eyes are correct, the rest will follow. I like to draw in each individual hair of the animal, layering the media (pastel more so, but I also apply up to 20 layers of graphite to get to the depth I want) to create a sense of depth. Kayhmk mentioned about, about tonal values. You want to work with all tonal values from 1-10 in a drawing and also spread them throughout the piece, so make small area's of the eye black, then add black to small sections of the nostrils, ears and under the jaw. You also want whites in a drawing to give highlights, often whites are shown next to blacks to give the greatest sense of depth. Do not be afraid of dark tones, they give the portrait a sense of realism, if you stay within tones of 3-8 as I see many people do, the drawing will look flat and not 'pop' how you want it to.
Ahh horses eyes, tricky things they are! I love drawing eyes of any description, but horses can be very difficult as often there is no striking detail in them. Find photo's of horses eyes zoomed up, and practice drawing them. Start by gettign the basic shape correct, then add small circles were each tone lies, so say the highlights from the camera flash, the dark pupils, the lighting along the edge of the eye etc. Then start to block the colours in.
It takes a alot of practice, and eyes are very tough as if you don't get them right, the entire portrait it ruined- or at least will not look anything like the individual animal. When drawing eyes, keep in mind that you are drawing windows to that animals soul. You want to capture it's emotion. If it looks excited, you can use sharper strokes and lots of highlights to give a 'glint' in the eye, and of course if the animal looks depressed, you can use softer strokes and deeper tones.