The upstairs bathroom flooring was done identically. The luan was glued and nailed to the plywood. After several hours, the luan was up and the subfloor was torn up pretty badly. I tiled up there, so I was able to smooth it out with thinset and lay Durock. I'm afraid that if I pull up the luan in this bathroom, I'll be facing the same thing, and a new layer of luan won't be enough to even it out. The old luan that I'm uncovering is only about 6 years old, so it's not that bad, it just needs some patching. That said, if it's still recommended to pull it up, I will...but I'd love to hear that there's a reasonable alternative. Either way, I'll need to patch seams, and I'm not sure what I use for that purpose.