Its too late to think about what should or shouldnt have been done, the cat is out of the bag now. A lot of interesting ideas, and I will most certainly think about them, when and if it comes my turn to be in this same situation. Now is the problem of what's the next move, which also brought a lot of suggestions. At this point, I would probably accept the 1/3, since it is still a lot of money, but the suggestion of 1/10, should not be on the table. This is not a real estate deal, not at all in the same class. Also the idea of hunting for fun, must be from someone that has never put much effort into hunting. Yes, this is a hobby to most of us, but if you start giving your time and knowledge away, then you are worth, exactly what you are charging, Nothing!
I am also a diver, and I never dive for free. Even when I am already in the water, and have done a job for someone, if another person comes and ask me to check his boat at the same time, I will charge him for it. The people that know me, know that I will do the job, but sometimes I have been the second diver to do the work, because the first diver was a friend or someone that does diving for a hobby, "free", so had no interest in really doing anything. I have put too much money, and time, to learn my skills, so why give it away? Also a big cache hunting project is not the same as while your tot lot hunting, a lovely mom comes and ask if you can find her keys. For that, you can do a quick hunt, and if you find the keys, you may even get a bonus if your lucky.
The reason I would accept 1/3 and not hold out for 1/2, is just to get the project completed, and move on to the next. I dont really think its a question of right or wrong, just what both can agree on. As someone pointed out, it could be enough to last a life time, so why blow it? Just give up the e-mail and telephone conversations and do a face to face, and complete this project.
And again, Frankn, Good Luck!!