It sounds like you're not that far into the project, so if that's correct, I wouldn't even worry about what happens to the modest amounts of IP you've already written. If they can't do this project without you, all you have to do to regain control of the situation is stop working on it until everyone has agreed to terms you're comfortable with.
I agree that you don't want to be adversarial -- just explain that you're not comfortable with those terms, that you hope you can work something out with them that makes sense for everyone, and if you can't, wish them luck with their project.
Two things to remember: first, if something can't get sorted out amicably, these aren't the right people to be working with anyway, so you're better off finding that out up front. Second, if you're the only one who can deliver a product, you're always the one holding the cards.
I agree that you don't want to be adversarial -- just explain that you're not comfortable with those terms, that you hope you can work something out with them that makes sense for everyone, and if you can't, wish them luck with their project.
Two things to remember: first, if something can't get sorted out amicably, these aren't the right people to be working with anyway, so you're better off finding that out up front. Second, if you're the only one who can deliver a product, you're always the one holding the cards.
Good luck.