The walls in my bathroom are tiled from the floor up about 3 feet. The floor is linoleum. I purchased tile to replace the linoleum and hired someone to install it. While removing the linoleum, we discovered that the bottom row of wall tile is chipped at the point where it met the old linoleum (the linoleum was very poorly installed and caulked). I left the tile installer alone for a while and when I returned I discovered that he was not only laying the floor tile right up against the wall tile, but that he was also cutting the floor tile to create a baseboard over the chipped tile on the wall. I don't want to replace the wall tile (too expensive) and this looks like a reasonable way to cover the chipped wall tile. The installer also tells me that this is fairly common from a decorating perspective. I can see where it would be common on a drywall wall, but maybe not so much for tile on tile. So, is this normal? And, even if it's not normal, does this seem like a cost effective way to not have to deal with the chipped tile at the transition from floor to wall?

I have seen it done like that before. Sometimes there is no easy way out and you have to make the best of a bad situation (speaking for the tiler). Ripping down alll the tile is not an option and removing only the bottom row if it came out clean, which I doubt, would have to be replaced with something, like the floor tile or a new wall tile which probably wont match in size and color perfectly to the old tile that has been up for years. So by doing what he did it should save you money and time over the alternative and you avoid a dirty dusty removal situation.