Sounds like a sensible idea, just need to make sure that tile + mud height = wood floor height, so you don't have stubbed toes after taking off the shoes! :>)

We had something like this in a previous house, and it worked well. It was original to the house, so I can't help with installation issues.

I think the two types of flooring have to be able to expand/contract independently of one another, meaning you need to use a 'T' shaped molding in the transition are.

Hope someone who has done it can give us an answer: I'm planning tile throughout my main level, with a wood 'inset' in the center of the living room for more visual warmth.

We did this in our entry. We just put the tile down and still have to grout, so don't have a lot to offer in the way of experience over time. It's been there enough for me to know that it's sure tougher than the hardwood and will take more abuse. I don't worry about setting things on it, or people walking on it with dirty shoes, so think it'd be a great thing to have where your family takes off their shoes.

Here are a couple photos of the dry fit and when it was being installed. I posted the dry fit photo so you could see more of what it will look like without the lovely blue tape!

Wow Rhome! That is fabulous!

One of my clients did this in a kitchen. I designed and sold the cabinets and granite only. The tile floor looks so real as a rug people always did a double take. This was done about 10 years ago and I never did find out what brand of tile they used. Their wood floors are also layed in a 'picture frame pattern' around the tile inlay.

Kompy

We're thinking of doing this too! The floors get more worn there and thought this would be a good solution. I hadn't thought of making it look more like a rug though - nice touch.

Rhome I love what you did - it's definately going in my clippings.

To give credit where credit is due, our 11 yo dd chose the tile. ;-) I would have probably chosen something more intricate (fell in love with an inset tile design I saw at a store that looked like a quilt and was done in 1/2" polished marble tiles). I am glad I went with her preference...More understated and timeless, I think. She chose it months before we decided on the wood flooring, so it was a wonderful coincidence to have it match so well.

wrt where the two different surfaces meet--I would think a good caulk line (NOT white caulk, but colormatched to the grout--Laticrete makes it in two different formulas, I think) would be sufficient to allow for expansion/contraction...

Rhome-that is so cool!

I have this small odd area by my back door, and I thought tile was a way better solution. It's the mini mud room.
Tile is tumbled marble Jerusalem Gold and Rojo Alicante 12x12's.
The floors are flush one to another, because I took extraordinary pains to do so.
There's an eighth-inch gap from the tile to the wood. (someday I'll fill it with "Big Stretch" caulk).

Thanks, everyone. We were fortunate that 1 piece of the backerboard brought the slate fairly even with the wood flooring (being natural slate, it varies in thickness), and one more piece added to the center brought the penny rounds even with the slate.

Casey, I didn't think your kitchen could get any better than I already thought it was, but I love that.