Re: no subfloor
t &g boards were what was used for sheating floors, walls and roofs back in the day before plywood. putting down subfloor is fine. no worries of rot as long as theres no leaking water.
only thing i would do first is pick up some 2 " screws and screw the boards down to the joists first then go with 3/8" underlay as opposed to 1/4". 3/8" is stronger and much better suited to tile. you want to stiffen up the floor as much as possible before tiling over to prevent cracked grout and tiles popping up from floor movement
fire up the saw and make some dust