First things first. Your contractor should make stain samples for you to approve. Whether they turn out blotchy depends on many factors. The type of pine flooring you have, how dark a color you choose, the type of stain the contractor uses, etc. While it's true pine can stain "blotchy", that can be minimized. The contractor you selected should know how. If he doesn't, then send him here to ask how.
RE: the finish. NO finish will make the pine harder than it is, meaning, using a more durable finish ( expensive ) does not make the floors more dent resistant. Commercial finishes just are usually more abrasion resistant ( scratch less easily ). IMHO, I think (3) coats of a QUALITY OMU ( oil-based poly ) over an old pine floor would look great and should easily last many years. I did my dad's oak floors over 25 yrs. ago with (3) coats of Dura-Seal poly. They are dented and scratched but the poly has not worn through. Now, if you want to spend the extra on Bona Traffic ( forget Mega, it is not that good, IMO ), you certainly can. It should give you more scratch resistance. I would figure it this way. 1250 sq ft. ( 1100 + 150 for the stairs ) = 2.5 gallons of OMU per coat @ 500 sq.ft. per gallon. So, max, you would need 8 gallons. Assuming the contractor wanted to use Dura-Seal or Fabulon or similar, figure $35.00 tops per gallon x 8 = $280.00. That's what the finish would cost IF using an OMU. Now, figure (3) coats of Traffic @ 400 ft.per gallon ( Bona wants a heavier spread rate ) So (3) gallons per coat, or 9 gallons total at $120.00 per gallon TOPS. I know sites that sell for less. So 9 x 120 = $1,080.00. If you minus out the cost of the OMU @ $280, that's a balance of $800.00. So your contractor sounds as if he is being fair by offering you that finish upgrade @ $700.00. Keep in mind, Traffic is a lower VOC. It is not VOC free. It is not advisable to be around while the finishing is being done. All the airborne solvents will normally be gone in the one week curing time. Ask for samples of both to compare.
Gary here is a picture of a yellow pine floor I did out in Marshfield