This is golden:

By showing neither a static image of my design, I set none of the false expectations that, by definition, a static Photoshop or Fireworks visual would have established.

Helps you avoid shooting yourself on the foot.

I think you’re spot on and the whole “progressive visual enhancement” thing is clearly best suited when the design is created in the browser, not in Photoshop.  Instead of the benchmark being the Photoshop comp, it’s whatever the designer feels is an acceptable compromise between browser capabilities and the mental image of the design.

I still feel trapped in Photoshop by budget, though.  It’s simply quicker for me to knock out a comp in Photoshop (especially when I may end up scrapping the entire design if the client doesn’t approve), thinking in terms of how I’d be coding, which is better for the low budget sites I typically find myself with.  I’ll be looking forward, though, to a chance to do in-browser design on a project.

I didn’t address the issue of dealing with clients in my comments over on 24ways, but my opinion is that it is a.) not necessary to design in the browser in order to avoid pixel-perfect discussions, and b.) there’s no reason to be so surreptitious about it. Our clients know these issues before signing on with us. All it takes is good, honest communication.