wiz, i understand your position, but from a web dev pov, i often have to deal with clients where their IT departments have draconian policies.
invariably it goes like this:
1. you have to use their servers because these are somehow more secure (this really means that some guys in global head office don't trust the guys in the third world with their brand. "yes, i know you built my website, but how do i know you didn't sabotage it?"

)
2. their IT department isn't familiar with running a web server and certainly knows very little about anything which doesn't come from microsoft
3. you can't access their server because it's behind some dmz, and making an update to core files requires a non-web guy to fish around in the webroot.
4. their IT department is a bit cagey about firewalls and has never set up ftp or remote sql access before.
5. when their server goes down, they come running to you asking for the last version on your dev box because their backup didn't work
6. they have some complicated setup with patent attorneys, domain registration, overseas dns management
7. a bunch of directors on a golf course just spent a whole whack of money on some costly overkill hardware and software so you better darn well use it
8. because of the above point, they assume that shared hosting is really expensive and that they are saving lots of money by hosting in-house.
9. who knows what setup the internal IT department has in-house, how old their software is and how often they patch their software or upgrade the os.
in reality, dedicated hosting companies are cheap, have automated backups, very little downtime, redundancy strategies in place and full time support staff who have experience in web software and services.
instead of going through all the issues listed above, it's much easier to just say "it can only run on my server".
at least then as a developer you don't have to go back and forth asking for this and that to be debugged, installed and reconfigured.