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Solid hardwood should not be installed below grade. However, engineered hardwood can be installed in basements as long as you do not have an existing moisture problem.
The good news about ceramic tile is that in the event a piece is damaged it can be extracted and replaced without being an obvious repair.
No. Many people with large dogs have hardwood flooring. Your dogs will scratch the floors and it will cause more wear; however, unlike vinyl and laminate floors, hardwood can be refinished in the future. Keep in mind that even under normal circumstances, your hardwood floors will scratch. That being said, as hardwood floors age they tend to mellow.