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Nothing wrong with this - as long as you're getting paid.
My advice would just to get a nice contract drawn up and establish in it that the client would be paying you for your web design services and that your money wouldn't go to the gfx artist.
The main problems that can occur is from a graphic design poinbt of view, the objective is to make something to look good.
As others have said, and you're no doubt aware, there are distinct differences between web and print media.
My advice would be to start off by explaining broadly what you are trying to achieve in terms of SEO and web design.
To begin with you should both work together to come up with an overall feel and look for the website.
During this process you can use the creative ideas from the designer and also let him know what you can do and what you cant do - and more importantly why.
Then knock together a template based on the design and add your own spacefiller graphics where the work from the designer is to go. This way they will know what they need to do in terms of image sizes, etc.
Make it clear to the client that you are the web designer and as the final product is a website, if he wants results then you have final say. The designer should be there to help you achieve that.
However, if the client gets sold by the graphic designer on a jazzy website, then explain the possible pitfalls with this.
If that doesnt work, just make the site the way the client wants it. They're happy and you'll get paid.
On a personal note, although I encourage my clients to get involved in projects and learn, I shy away from situations were the results are likely to be inferior, due to too many aspects being out of my control.
On the wall in a mechanic's shop...
"Our Rate: $30/hr if we do all the work, $60/hr if you help"