Why not praise them for both. Joel Spolsky wrote a whole book on the importance of hiring smart people, but also people that get stuff done. I tend to think that having a strong work ethic is more important than being smart, as longs as you are smart enough to complete the task at hand, but if you spend all your time grinding on the wrong thing, you aren't going to get anywhere.

Praise kids for effort put into intellectually challenging work that they complete with good results. We should praise intelligence, it's what our society runs on. Intelligence certainly doesn't need to be devalued any more than it already is.