Tile – Should baseboard trim be in contact with the flooring

In view of the new information, I would remove the mortar in the gap. Seal the edge of the wood floor at the sub floor with a waterproof caulk and use a funnel and self leveling (cement based) underlayment to make a flat base. Tape both sides of the gap with some blue tape to make any cement spillage an easy cleanup. When setup (24-48 hr) and well cured, attach the transition to the gap, I prefer the polyurethane adhesives (PL) over LN. (It is stronger, stickier and more flexible, over time).

As noted previously by Tester101 in chat, weight the transition in place overnight.

There may or may not be an easy answer to your question. I would start by calling the grout and tile manufacturers to get their opinion. In general though... You should reasonably expect to get the quality of service you contracted and paid for.

Bottom line is do you think you're getting what you paid for. Not what you think you paid for. If you hire the best electrician in your area to paint your kitchen, don't expect to have the best painted kitchen in town. If you don't hire someone who specializes in tile installations, don't expect to have the best tile work either. If you hire the best tile setter you should expect to have an amazing tile job. You should always check references and try to see examples of their work from the people that you found them through so you have an expectation on the general quality of their work.

Looks like a 3x9" tile (or somewhere around there) which results in a lot of grout lines. On top of that you want thin grout lines. It all adds up to a difficult tile installation. At what point was the contractor aware of the tile you were using? Was it when you spec'd the job or the day he showed up to lay the tile? Usually there's a little bit of blame on both sides.

I'm just a DIY'er but I would have used more tile spacers than he appears to have used (based on the marks in the mortar not the spacers in the photo) and would have scooped out any excess mortar in the joints and off the faces of the tile before everything dried. There may however be other issues that affected the spacing that were outside his control or the budget for the project.

Things may look different (better or worse) once the grout is in. Maybe you want to put grout in a small section before the rest of the tile is laid to get a better idea. If you're not happy talk to your contractor to see what can be done. Depending on the situation it's probably fair that both parties eat some of the cost to redo (or not.) Or just get a different contractor.

Update

Found this info from the Tile Council of North America's FAQ There are also apparently some ANSI Standards on this.

What is the standard for variations in grout joints?

When evaluating grout joints, it is important to consider that the grout is used to adjust for differences in the following:

Variations in the size of the tile Changes in the plane of the substrate Changes in the thickness of the tile (often this applies to hand-molded tile) Variations in the rustic profile of the tile The standards for the manufacture of tile allow for variation from tile to tile. While the standard details this exactly, it is not uncommon for some manufacturers to ship tile with about 3/32" difference between the largest and smallest tiles in a box.

Grout must adjust for these differences between tiles so understandably there can be some variation in the width of a grout joint.

Generally, it is advisable to use a grout joint at least two times the average difference between the largest tiles and the smallest tiles. A smaller joint will exacerbate the differences between tiles as the human eye can readily see very small differences as a percentage of the total grout joint. For example, while a difference of a 1/16" of an inch may seem small on a 12" tile, this is readily apparent compared to a 1/8" grout joint.

As the plane of the tile changes, the grout joint allows for this change. Should tile go over a hump in the floor, the grout joint will open; when tile follows a depression in the floor, the grout joint will narrow.

Clearly, grout joints also accommodate both changes in the thickness and profile of rustic, hand-molded tile.

Perhaps due to these variables, there is not a numerical standard to which the tile grout joint must conform.

ANSI A108.02, Section 4.3.8 of the ANSI A108 standard says, "Nominal centerline of all joints should be straight and of even width with due allowances for hand-molded or rustic tiles."

ANSI A108.02, Section 4.3.10 addresses variations in the plane of the tilework. This section states, "Finish floor and wall areas level and plumb with no variations exceeding ¼" in 10 feet from the required plane."

However, it should be noted, elsewhere in the standards the plane of the subfloor is required to be similarly flat.

Tile installed by the thinset method is really a surface finish that will follow the plane of the substrate. As such, variations in the substrate will be reflected in the tile layer, unless additional leveling is performed.