We study the interface between a solid trapped within a bath of liquid by a suitably shaped nonuniform external potential. Such a potential may be constructed using lasers, external electric or magnetic fields, or a surface template. We study a two-dimensional case where a thin strip of solid, created in this way, is surrounded on either side by a bath of liquid with which it can easily exchange particles. Since height fluctuations of the interface cost energy, this interface is constrained to remain flat at all length scales. However, when such a solid is stressed by altering the depth of the potential beyond a certain limit, it responds by relieving stress by novel interfacial fluctuations, which involve addition or deletion of entire lattice layers of the crystal. This "layering" transition is a generic feature of the system regardless of the details of the interaction potential. We show how such interfacial fluctuations influence mass, momentum, and energy transport across the interface. Tiny momentum impulses produce weak shock waves, which travel through the interface and cause the spallation of crystal layers into the liquid. Kinetic and energetic constraints prevent spallation of partial layers from the crystal, a fact which may be of some practical use. We also study heat transport through the liquid-solid interface and obtain the resistances in liquid, solid, and interfacial regions (Kapitza resistance) as the solid undergoes such layering transitions. Heat conduction, which shows strong signatures of the structural transformations, can be understood using a free volume calculation.