Tile over peel and stick

I'd take it out and put something like Durock or Wonderboard over that

I agree with Ed. Ceramic tile is not cheap, but it does last a long time if done right. The last thing you want to do is have to remove it and replace it.

If the peel and stick is "stuck" tile will go over it just fine. Use "flex" mortar (Ultraflex or similar) and it will be OK. I put this down almost 20 years ago and 10 years ago it lived outside while I was replacing the room around it. A "Florida room" Aluminum and glass was replaced with concrete block. I was prepared to replace the tile but it turned out I didn't have to. Guys were running over ut with wheelbarrows and all sorts of abuse. It is still solid.

I also agree with Ed and now ken. I've seen peel and stick tile come up when another floor was laid on top. It was a small section but they decided to redo the entire floor to avoid another area coming un glued.

I would use a decoupling membrane like Ditra to be safe - but peel ans stick should come off relatively easily with a heat gun - and then you KNOW you are OK.

Durock or wonderboard over 1/2inch plywood over 1 inch (or 3/4") diagonal flooring is EXTREME OVERKILL.

I WOULD use a decoupling membrane. I use Ditra (Schleuter system). Great stuff.

The reason I didn't pull up the original tile is it wasn't coming up easy and I wasn't sure it didn't have asbestos in it. I just stripped it with lacquer thinner yo get all the old wax or whatever off and put the porcelain tile down with "flex". That was over to years ago. I suppose some day it might start to loosen up but that will be someone else's problem.

Overkill is underrated.

That's exactly what we ended up when we remodeled the bathroom, so that the height would "match" the hallway outside. It's actually a tad lower, but not so much that you stumble across the threshold.

Cindy Hamilton

But if the existing tile floor is already level with the surrounding floor - or even above because of the existing half inch of plywood you are REALLY making a mountain out of a molehill - - -

I set my ceramic tile to exactly match the hight of my new hardwood flooring in the living/dining room

Yep. Circumstances are important.

I don't mind the bathroom being a skosh lower than the existing hardwood in the hall. It gives me the illusion that some water spillage in the bathroom would not damage the hardwood.

Cindy Hamilton

Illusion is correct. The water would just get in underthe hardwood un-noticed and rot things out from below

Actually, it probably would go right out the floor penetrations for the plumbing. If it were a substantial leak, I'd notice the water on the basement floor.

Hopefully water...

Cindy Hamilton

It depends on how the threshold is designed and what the sub floor is.