The answer is "it depends" -- on what you need, on how well it's cared for, and how often you want to refinish it. Real wood is measured by something called the "Janka Hardness Scale" -- oak is a good choice, as it's rated at about 1300, with only more exotic woods being harder. I was told that Oak would probably be scratched by my dogs' claws, though, and I imagine that the invariable stones stuck in kids shoes will be worse. If it's possible, get real oak and make the kids take their grubby shoes off at the door... :-P
The "engineered" hardwoods are better because they're cheaper, but worse because they're not able to be sanded smooth and refinished. You'll usually see thicknesses plus a Janka measurement or an AC rating. The thinner the veneer, the more likely you are to crack through it no matter what the hardness of the veneer or the AC rating of the floor are.
For 100% composite stuff, such as Pergo and Kronotex, you'll see hardness measured on an "AC" scale that's basically a designation for how much traffic the wood is designed to bear in a residential or commercial setting. "AC2/Moderate Residential" will be too soft for your needs. "AC3 - Light Commercial/Heavy Residential" may be durable enough for your needs, but might show wear. "AC4/Moderate Commercial" is most likely what you'll need to go with, and it's harder to find and more expensive. However, it's less expensive than wood is no matter what.
Two things you didn't say... first, what kind of structure you're installing it on. Is it a wood subsurface, or is it slab-on-grade or slab basement? If it's on concrete in any way shape or form, you definitely want to go with something that is composite and less expensive. I know that you CAN install wood on slab-on-grade, but I would never consider doing it, personally. Second, what rooms is this going in? Wood floorings, regardless of composite or engineered or natural, is not good in places that will receive water on the surface or may be exposed to leaks. So the entry hall (front door and back), the kitchen, and the bathrooms are places to avoid having wood floors. I would keep vinyl or tile in those areas, or explore the wood-grain ceramics that are becoming quite popular for those areas or over slab-on-grade.
Don't worry about making new tabs or grooves. Just cut the offending tabs off. For the planks on the floor, use a sharp chisel. For the new boards, cut them on a chop saw. You want the two mating faces to be as perfectly square as possible, otherwise you will end up with a gap or one board riding up over the top of the other.
In places where you still have underlayment, a belt sander with a rough grit will take care of that in seconds. Make sure you have a shop vac hooked up to the sander!
Also, try not to have two planks next to each other where you have cut off the side and the end tab. This could lead to buckling. Provided you plan ahead on your installation pattern, this should be achievable.
Best Answer
There are a lot of factors when it comes to pricing flooring as it has become a highly competitive, mass produced commodity.
What you have here is the cheapest specs you can get in wood flooring:
2" wide planks are about as narrow as it gets, it is a harder install
3/8" thickness is about as thin as it gets and will limit its application to something that has a very very good subfloor.
these planks can be made out of literally the scraps because they are so narrow and thin. The wood costs are probably ridiculously low and most of the cost to consumer goes to transportation and cutting the tongue and grooves.
quality hardwood flooring is 3/4" thick. Yours is half that. There is usually a 1/4" wear layer which allows 3-4 sandings. I wouldn't expect more than a very very light touch up sanding out of 3/8" flooring.
thinner hardwood is more likely to develop splitting or impact cracks
thinner hardwood is more likely to warp
the cost differential between this and other flooring options is negligible. I can get decent 3/8" laminate and engineered flooring for about $2 sq/ft.
in fact laminate and engineered flooring might be a much better solution if going thinner as there is more control for humidity variance and moisture intake.
I personally just installed engineered flooring in a house that was 5/8" thick, looked beautiful, and had 4.25" width. It costed $2.89 sq/ft. It was a dark brown and we got a quantity discount which dropped it 50 cents sq/ft. It would beat any 3/8" hardwood on the market as it had a solid pine layered backing (no mdf). I mention this because its ugly sister - same exact stuff in really ugly orangish brown try at cedar - was selling at $2.05 after the quantity discount.
you will pay a premium for a manufacturer of hardwood. If it is not being labeled by a major hardwood manufacturer it will cost less. It is like going to the store and buy Cola or Coca-Cola. You know how one will perform and not sure about the other. I have gotten some bad and good really cheap flooring.
Every major hardwood distributor carries 3/8"x2.25" planks that I know of from anywhere between 1.50-2.25 sq/ft. It is mainly so they can say in their ads, "Hardwood flooring from $1.79". Another reason would to be just to satisfy a cheap customer. They do not really want to sell you this stuff. It has innate problems and needs to be installed right and they don't want to hear about problems on a product with slim margins. If someone is pushing this on you it means they are carrying way too much of it and need to make space.
And to summarize - what you are talking about isn't "real" hardwood flooring. It is a cheap imitation made out of wood. It is a con job on the uninformed consumer. You are informed now so you will buy something with at least 5/8" thickness or you choose laminate or engineered flooring as they will perform better with the same or longer life expectancy.
Note: This is not a shameless plug but I have used BuildDirect at least 20 times to buy wood/tile/laminate - I have absolutely no affiliation with them. (waterproof laminate they have is awesome. They have sales and clearance sell offs. They send you free samples. There are a range of flooring in the low 2s that meet your criteria and 3/4". Maybe a utility grade flooring will give you what you want as it is actually great flooring but has knots, natural cracks and blemishes - but done with thought these look great.