I am a contractor in california. i am currently in contract with an
incredibly anal-retentive customer to build his house. His constant
perfectionism has cost me  tens of thousands of dollars. Where can i
draw a legal line in the sand? There is no time penalty built into the
contract. if the customer refuses to pay for changes can i drag out
the length of time to complete the job without penalty, or legal
consequences?

You need to add additional information:  1) who owns the land the
house is being built on? 2) what does the contract say about changes?
and 3) what are some of the changes he is asking for?

You need legal advice on this.

The best way to build on someone else's land is to buy the land from
them with them haveing the right of first refusal when the house is
done.  This way you control access to the work site.  They eliminate
the risk that if the house is not finished on time or the builder goes
bankrupt etc. they are not left with a lot with an unfinished house
with liens on it.

In this case you should explain that all changes are at the expense of
the purchaser - and your contract should state that.  You are
responsible for constructing the house to generally accepted
contruction standards. Anything more is at the expense of the
purchaser - your contract should state that.

I don't know the legalities of this particular situation, however, I
can give you some advice for in the future.  If you use a formal and
documented project management approach that includes:

A detailed scope of work with responsibilities of each party outlined in detail
A very complete WBS (work breakdown structure) and timelined project
plan with all dependencies documented
A written document regaring acceptable variations in specifications
that the customer signs prior to construction starting, i.e.. that a
wall can be at 91 degrees and still be acceptable, or that
hand-plastered walls have a slightly un-uniform surface, or that prior
to base moulding going in, hardwood floors can be up to 1/8 inch from
the wall, etc.  Use the generally accepted construction standards that
daniel2d recommends.

AND, in the future, don't start the construction until the guys signs.
Obviously, it's too late for this guy for the work you've already
done, but perhaps you can negotiate something similar for the work
that's still to be done.

I worked for a man that did the same thing to his contractor in FL. 
Frankly, he took joy in it and relished the power. It was a 3 mil
home, so there was ample room for personal profit for the contractor,
but he ended up just breaking even and losing 9 months in the process.
 This guy had them pull up an entire 40ft x 28ft marble floor (14"
pieces) and do it over again because at the doorway, prior to the
abutting wood flooring being put in, the tiles came up 1/8" short of
the doorway. They broke a few tiles in the process, and when he was
going over the bill, he made sure to charge the contractor for them.

I suggest a frank discussion with the guy.  You are not doing the work
for charity.  Appeal to his business sense, perhaps. ???  If all else
fails, provided it's outlined in your contract, I suggest mediation.

Greetings cad55,
Aren't there any standard definitions of building quality in the
States, standards referred to in contracts to avoid detailing
everything?  The other commenters seem to suggest so.  When I was
involved in building a house in Germany, I learned that it is usual in
the contract to define that subsequent changes in the original plan
are at cost plus 15%.
But if the contract is weak in this regard  - to your detriment -  it
also seems weak to the detriment of the customer in that it has no
time penalty.
This could be leverage in dealing with him, but as daniel2d-ga
suggests, you should get legal advice before starting to negotiate.
Good luck.