Jim--Lap joints are historically sanctioned for flooring, and were the common method until well into the 1800s. The boards aren't nailed through the trailing edge but directly through the top. The houses in Colonial Williamsburg offer a good example of new construction using this method--the evenly spaced square nails give a nice appearance.
I agree with you that exposed nailheads are not desirable in some respects, but if a rustic and authentic look is desired I don't see anything wrong with it.
As to putting a finish on the floor (which was not generally done until the 19th century), I don't know what kind of problems might come up. Must be pretty hard to sand and prepare the surface with the nails poking through.