Nancy,
I have 2 dogs and to very young boys- I live on laminate, but love wood. At this time of my life I probably wouldn't install wood on my floors, but I wouldn't spend to replace it either. Considering what a good laminate (one worth installing not the bottom line stuff everyone sells by the pallet) will cost you installed, you could probably have your floors refinished twice. Personally I expect once is all you'll need for a while if you'll take some advice;
#1 - Study your floors. By looking closely you'll not only learn where to put area rugs, you'll also probably see the directions from which the abuse is coming. Now you can place obstacles to slow down the traffic.
#2 - Kids will be kids and dogs will be dogs, but they don't need to "Be" where you live. Set some rules and "off limits" areas. I know that isn't easy, but you're not helping anyone by letting them rip up your place. The kids hang at your place because they don't get hassled. They still need to learn to respect other peoples property. If you have part of a basement or another area they can call theirs, good. If they have to cross your property without damaging it in order to enjoy it, better.
#3 - "Shoes Off" and clean feet only! You've got a mud room, use it. If you could get a half door at the mud room, you could intercept a lot (particularily the dogs). A waiting chain in the mud room for the dogs would also be good to hold them till the kids can clean them up.
#4 - Consider a rustic distressed look, and a penetrating oil finish that you can learn to touch up yourself. Depending on how well you do on the other points, you may or may not need to go this route.
#5 - Last but not least, get the whole house on board! Considering what it's going to cost to get your floor redone, Disney World should probably wait another year (that'll get their attention).
I realize that this will be hard to implement, but if you don't take back control of your house (to some degree anyway) you'll need concrete floors (Sorry Gary, but I've seen what a pack of dogs can do to tile and grout. It's not always enough.) Believe me when I say that with laminate, all you'll be doing is replacing it every three years or so, given the abuse you describe. Oh, and engineered wood wears no better than solid.
The only other thing I can say is start the training long before you have the floors redone. It's only after you see what progress you've made (or not) that you'll know where to go. Hopefully not concrete!
Good luck!
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