Those patches stand out not because they're face-nailed, but because they were poorly done. I would expect paint to make that small square patch more visible, not less.
You could patch with face-nailed strip flooring, fill the nail holes, or glue down the patches, or just do a neater job with the patching and just let the nails be.
As far as the general wear and tear goes, you don't need to sand down to 100% bare wood. I've seen plenty of nice floors that were sanded just enough to get rid of problems, then were finished. They have a nice look.
As for floor paints - they require regular maintenance and re-painting, but that's not the end of the world.