I'm looking forward to seeing how I won't get burned when the client changes their mind midway through :-) Seriously though, good article - though I'm jaded and have my doubts - but kudos for putting this series together.
Stay tuned for part 4. I wouldn't say that people should always use this approach, but there are some ways to make it work better, not just for you but also for the customer. (This was originally supposed to be 1 post, then 2, but it eventually got way too long.)
Looking forward to hearing about how to mitigate the risks of taking this approach!