Your customers sound like the smartest and most sensible people I've heard about in a while. The current way the Web is changing makes it almost impossible for in-house use in a large corporate environment. But at the same time, it's almost impossible to avoid it entirely; so instead do the smart thing and put a hard stop on it and refuse to hit the moving target.
I don't disagree. I feel like I'm caught in the middle. I personally prefer the old internet where websites could have simple design and typography and still be perceived to have value.