Your phone ringing off the hook will only happen when he thinks he might get what he's asking for; which is a different problem altogether.
Generally I've learned to never dissuade someone from chasing their dreams, no matter how unrealistic I feel it is. I have learned to tell them what I feel they would benefit most from focussing on.
Don't ever go agile with a client you know up front has unrealistic expectations. Screw "customer collaboration over contract negotiation", you cannot collaborate with a client that isn't operating on the same level of reality.
This kind of client will screw you over the first chance they get, and the worst part is that half the time they won't even be aware of it.
If you can afford to say no, say no. If you can't, make sure you have a bullet proof contract, fulfill the contract diligently and then run.
Oh, and add a considerable percentage of overhead costs to your offer. Because even during the process you're going to be spending an awful lot of time explaining, negotiating and documenting everything.
Finally, check this client's network. If he has a lot of contacts and influence, and he can't manipulate you into doing lots of free extra work to salvage his project, he's likely to publicly blame you for his failure. One thing people with unrealistic expectations have in common is that failure is never their fault.
Here's the work that I will do for this milestone. It will take me approximately x days and cost y.
I then get the client to sign off on that before commencing work. This make sure that I get paid for work that I do on a regular basis. If the client doesn't pay on time for the last milestone, then I stop work. It keeps everyone honest.
The right approach is the exact opposite: make this a time and materials contract, where you bill every month for the hours of work done that month. He will be able to ask for fixes to things which are outright bugs (depending on how the law and the contract specify the warranty provisions), but tweaks or enhancements will cost him money. Using this kind of contract makes it very easy to stick to your guns over this.