Barry- I've been in the same situation a few times. They involved custom hand-painted photos. Except for one occasion, they've gone just fine. The one problematic time, the client had asked a few other artists for artwork, too. I was not told that they were looking at other work, which would have been nice to know... In any event, I did the order, they bought elsewhere, but I ended up selling the prints at an arts festival.
I'd do it. Your terms are fair, and the odds are the client really wants your work.