They make latex additives you can add to premium floor patch that make it flexible and cracking is minimized to a negligible concern. I say if you attack it from every angle ie Sand some, float some, you should get it down to an acceptable amount that when the floor is finished it will be less than an 1/8. Less than an 1/8 is hard to "feel" or see unless you are looking for it. remember wood is a natural product and inherently imperfect especially when you are talking about a floor.

You need to do a little more archeological digging still. You need to know the whole construction of the floor before you can decide how best to install something new. I'd take up that plywood piece in the kitchen and see what's under it. It's higher than the surrounding floor, so needs to go. You should also be able to see from there what subfloor is under the original kitchen hardwood. It's too bad the space under your entryway is finished, but I'd still do some exploring from below to see what's under there, and to figure out the fix to stop it from squeaking. Is it drywall below or a drop ceiling? I know it probably seems like a pain to tear out drywall, but if you cut out a clean patch, like 2' x the width of the joists, it'll be relatively simple to repair. Just make sure to cut it down the center of the joists so that there's room to screw the patch piece to it later. Cut the hole under the area that squeaks the most, if you can. Have someone walk on and watch the floor from below to see what's moving. It might be as simple as pounding in a couple shims from below, or face-nailing a loose board from above. You want to find out what's underneath the hardwood. It might be laid directly on the floor joists, or there might be 10" wide boards that the hardwood is nailed to. Another thought is to take out a board in the hallway, since that's not original and you want to replace it. See what the subfloor is there. I am a bit puzzled at why, when you've stripped the kitchen down to the original hardwood, it's still higher than the hallway floor. Is your current surface perhaps not the original kitchen hardwood? Peeling back the plywood area will help determine that. BTW, I haven't heard of that stop squeaking product you linked to, so can't offer any personal opinion. And don't pour self-leveling compound over top of hardwood. It needs to go over plywood.

Chisue: Thanks for your comments. I am not sure about the lengths that prefinsihed comes in. I need to work that out. Good point if we lay the hardwood across the hall (rather than the length of the hall) it will lnot look chopped up at the bedroom door, closets and living room as that direction would just continue in to these rooms. The other door ways (laundry and bath off the hall) switches to tile. Yes diagonal is more modern. Probably why DH likes it better than I do, as I prefer a more transitional than he does. Amberm: Hope you are enjoying your Ontario visit. I would love to see a photo of your hardwood transitions when you get back to AB (Calgary right?). Thanks for the guidance on joist strucuture if we have plywood (vs the subfloorless days of yore). Our old subfloor is only unlevel in a few points (a few sags). A 1/4 inch would make it taller than the new subfloor. It seems the framers lowered the new floor so it would be on the same plane as the old subfloor. It may be that DH can use 1/8 inch plywood in a few low points instead of the messy leveling compound. Thanks for that suggestion. Do you happen to have a vote on best hardwood direction in our floor plan? Carol

My concern is the layers of vinyl underneath the hardwood. Hardwood doesn't like sitting on vinyl and vinyl doesn't like sitting on hardwood. The two do NOT like each other. If you think this is a good idea (which it is considered on the technical side of things a horrible approach to this) then you might have to add another layer of subfloor. A nice, fat, thick 1/2" plywood to cover those two layers of vinyl. Now you can go ahead and lay the hardwood. Technically, my suggestion is hideous. It is atrocious. It is so "unprofessional" that I could weep. But if you insist on leaving the vinyl in place, then you need to think of a way to separate the vinyl from the hardwood sitting on top....and one very sure way is with plywood. Again, my suggestion is a travesty. Then again so is laying hardwood over two layers of vinyl. In the flooring world, we 'allow' ONE layer of resistant flooring (like vinyl) to sit underneath another floor. For example: the first layer of vinyl was considered "OK" to lay another layer of vinyl over top. All good. No one in the technical department batted an eye. If a THIRD vinyl floor was proposed (or a laminate, or linoleum, or cork, or hardwood, or tile, or even carpet) it would be a "NOOOOOOOO! STOOOOOP! DON'T DO IT!" type of answer. So I will officially say: No. Stop. Don't do it. There. It has been said. That being said, if you as the homeowner choose to forgo the installation instructions and the "Best Practices" as set out by the National Wood Flooring Association (as homeowners your word is "law" when it comes to things like this), you are welcome to go ahead and lay hardwood over two layers of vinyl. If you do it, I suggest a new layer of plywood to help things along - because you need FLAT. And most "old hardwoods with two layers of vinyl sitting on them" are anything but flat. Good luck. You would be better off remediating the asbestos/vinyl and getting down to bare hardwood. Now a new floor (with the help of a layer of plywood) can go down. Or you remove the original hardwood with the vinyl (this is easier to do than scrape off the vinyl...and easier = cheaper) and start with a new layer of subfloor and go after it like it should be done. But as homeowner your word is "law". If you tell a professional to "just do it", they will say "yes ma'am/sir" and do it. But they will not warranty their work. You will be left holding the bag - and all the pit vipers that lay inside. It's your call.