I haven't done a contract quite like what you describe, but as has been pointed out, if both parties agree, anything in possible. I have found more success in a "retainer" model of consulting. We agree on a certain number of hours needed up front, say three months. If they pay a retainer up front, they get a 5%, 10%, or 15% discount (dependent on negotiations). They then burn time against these "retainer hours". At the end of their retainer you can slip into a normal hourly rate billing cycle or negotiate for another retainer at a discount. The client knows more fees are coming as the retainer approaches zero, and thus will very often not allow scope creep to come in.
I often try to keep a little retainer left over at the end. Some say I should keep this for "change" orders. However, I will give it back to the client! Why? 9 out of 10 times when I offer to return the leftover they are ready to add it to a new retainer for another project. You can't make a client happier than saying "here's the final demo of your project! It was great right? Oh by the way we came in under budget." Just make sure you are in constant communication with the client, have regular demos, and deliver something amazing.