One question it leaves me with is “how.” How do you get it down to an MVP? How do you or can you know what features are the most important? Most importantly, a fixed scope and budget has a product (even a bad one) at the end. It’s possible that a fixed budget with many many changes will not result in a full product. How do you explain and mitigate that outcome?
What are the chances you're writing a piece of software that is so useful and cross project that you're not releasing as open source or a Gem? I don't think 37Signals would be doing any better today if they had kept Rails to themselves. You can worry about this mythical case but it's incredibly unlikely to happen and will more likely hurt your ability to do work.
Why would you slack on writing good especially if you'll be handing it off? Once it's theirs they can do whatever they want with it including showing off your shoddy work. Even if the project is successful, it's unlikely they'll come back to you with more work in the future.
I agree that it all comes down to usage and content of the site. If the developer of the site uses something like this correctly to present always present useful information or links to the user, then they're great additions.