I have done both a refinish and a new install, and did a bunch of research before choosing. These are my generalized conclusions about the different choices:
Linseed / Tung Oil
Pros:
- Easy to apply
- Relatively durable
- Quick curing and drying times
Cons:
- Will darken with age
- Provides very little protection against wood damage
Oil based polyurethane
Pros:
Cons:
- Long dry times in between coats (~8 hours)
- Long time to fully cure (~30 days).
- Yellows over time
- Strong odor during application and cure
- Requires some skill to apply correctly
Water based polyurethane
Pros:
- Durable
- Low maintenance
- Easy to apply
- Short dry time (~3 hours)
- Short cure time (~7-10 days)
Cons:
- Short dry time requires a "wet edge" when applying.
- Provides less protection than Oil polyurethane
I don't have personal experience with the Tung/Linseed oil approach. Both of the areas which I was working are relatively high traffic, and I did not want to have to worry about damage to the wood surface.
I have seen the Oil-based poly done, and it is a production. It usually results in evacuation from the house because of the VOCs in the finish. The long cure times made it a deal breaker for me, because the areas in question were main walkways in my house.
So, in my case, I chose to go with the water based poly. It is durable, comes in several finishes (satin to high gloss), and is maintenance free for many years. It is easy to apply, and dries very quickly in between coats. It can be applied without specialized brushes or equipment. You can sand, stain, and seal your floors over a weekend, and they will be ready for walking 24 hours later, and will be fully cured a week later. This is a really good choice for a DIYer, and I would not hesitate to use it again in the future.
I hate to be the one to tell you this, but there is really no magic putty or filler for shallow scratches and gouges in hardwood flooring. Even though there are a lot of colored wood fillers on the market, they are not designed for high traffic flooring or nuclear dogs. If it was just a couple of scratches you might be able to sneak by with a filler, but not for a refinishing job in a larger area as you describe. Most engineered flooring has 3/16" to 1/4" of hardwood veneer over a plywood base. If the scratches have not gone through the veneer, then you can sand the scratches smooth, stain to match, and refinish with 3 to 4 coats of urethane. I would recommend an oil based urethane. Apply 3 to 4 thin coats rather than 1 or 2 thick coats. Remember, the veneer is fairly thin and usually can only be sanded and refinished 2 or 3 times at best. Once the scratching penetrates the plywood base, your floor is unrepairable.
My advise would be to protect the floors with area rugs, runners, etc or keep the dog's nails cut short, or better yet, train them to behave in the house.
Best Answer
Generally speaking, the only downside is that you can typically only refinish (sand down and re-stain) engineered hardwood two or three times, because there is usually between 1/32" to 3/16" (0.6 to 4.5mm) of the actual hardwood layer, and the rest is plywood, fiberboard, or another hardwood.
You'll typically pay more for a thicker top layer, which means you're more likely to be able to refinish it more times, and more importantly, it will last longer.
Like most things though, you get what you pay for. With cheap engineered hardwood there are likely to be other problems (just like with cheap laminate or even real hardwood) including not using a good quality base, which will warp or absorb moisture, poor manufacturing quality causing the top layer to come off at the ends, or the tongue-and-groove not to fit together nicely.