As a point of reference, most "traditional" fireplaces around here have a mantle (or equivalent) that is around shoulder-height or higher on someone who is 5'9" to 6" tall. So even when standing, one would typically be looking at the very bottom 1/4 to 1/3 of the TV.

Just a nit-pick here... A swivel/tilt mount doesn't (can't) alter the "viewing" angle. It's basic geometry. You would need an articulated arm that could physically change the height of the TV. Otherwise, while you may change the angle of the screen and therefore affect how perpendicular it is to your sight line, when sitting down you will always have to look up with head tilted at the same angle to see the TV. Angling the screen isn't changing the triangle created between your face, the wall directly across from it and the height up from there to the TV.

If heat and smoke are a concern, that fireplace should never be used as it likely no longer meets minimum building code and surely would never pass insurance requirements either. The whole TV above fireplace is just about the eyesore and ergonomics.

Matt, in the end, yeah, you'll probably have to do it if these are customers you'd like to do (or already do) other work for. If this were a one-off I'd say no. Just make sure they know that you highly recommend against it. You may get future business moving it somewhere else later.

What kind of fireplace is it? Wood-burning? Natural gas/LP? Is it sealed, does it have an insert? You can put a nice-looking wood panel above the fireplace onto which you'll mount the TV. Behind that panel you can run all the wires and potentially even hide slim source components like a cable/sat receiver.

As an aside, two sets of friends of ours have their TV above their fireplace (no doubt wife's decision), and I think I mention the awkwardness to them at least one out of every two visits. I believe it was also the builder who set the wiring up above the fireplace by default. Ugh. The main problem in the houses here over the past 10 years is the terrible locations picked for the fireplaces - and then the secondary is the terrible design of the fireplaces (cheapest builder selection).