How do I enable X Windows over telnet?

I realize that is is not secure and one should use ssh; but, we are on a closed intranet and my clients only have access to telnet.

Users can connect using telnet, but when trying to run an X application, get "Error: Can't open display", even though the DISPLAY environment variable is correctly set.

I set DISPLAYMANAGER_XSERVER_TCP_PORT_6000_OPEN="yes" in /etc/sysconfig/displaymanager
Removed "-nolisten tcp" in file /etc/X11/xdm/Xservers
Add the line "xhost +" to the file /etc/X11/xinit/xinitrc

X works with ssh but not telnet