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Speaking of XP... (eXtreme Programming, not Windows XP)

I hear a little bit here and there where some shops are using XP and loving
it, but I want to know if there are any who have tried it and abandoned it.
Here's why I ask:

Once upon a time, in a land not so far away, it was customary to do what was
called "watershed" programming, where you get your requirements, go away for
a few months, and come back with a complete system that the customer could
use and evaluate in whole to see if it is what they wanted or what needed to
be changed.  Most of the time, that worked out well.  Customers didn't get
mad about anything and programmers didn't work overtime for free.  But
occasionally a system was grossly out of tune with the specs and the IT
department realized a huge waste of time and money investments.

Then along came XP to solve all our problems.  We would start with something
small that works and add on to it.  We would release quickly and release
often.  This was a good idea for programmers because we could expect
feedback along the way and never worry about getting way of course or
wasting time or working overtime for free.

But it has been my experience over the past few years (even before the XP
concept was formally announced) that customers really hate this with a
scathing passion.  They expect always to see a completed system, even when
all you promised was a 'deliverable' or a 'milestone'.  They don't
understand the idea of getting a base system to work and adding layers or
components to it.  They just want to see it all at once.  They don't
hesitate to add new features during development or after implementation, but
they can't conceive of why you would want to break down the original specs,
organize them logically, and show them pieces that work.

Here's what I want from you:

1.  If you recently worked on a project where you used XP techniques and the
customer now hates you for it, please tell me so I know I'm not alone.

2.  If you recently worked on a project where XP worked out well for you,
what did you do to convince the customer to see things logically and stick
with it until all of the components are finally there?