
TIP: Removing headless nails/screws from your pallet wood.
There are many ways to break down pallets, and it's good to have a few tricks up your sleeve so you don't limit your options. Usually, I use a circular saw and cut off the planks, because I have only need the shorter ~18 inch or less boards for my current projects. Sometimes I might want to save the full length of the pallet slat so I take out my Sawzall, cut off the nails between the planks and the stretchers, and then remove the nail heads from the planks with a punch.
However, what to do with all those nail bottoms left in the 2X4 stretchers? You definitely don't want to send that wood through a planer or cut it with a table saw or miter saw. That could damage your expensive blades. Free pallet wood is not "free" if you destroy a $30 blade in the process.
If you absolutely need to remove a broken screw or headless nail from wood, and there is no easy answer with your typical tools, then you might want to check out this short 4 minute YouTube video on removing headless nails/screws from wood.
I myself have tried this method using my plug hole cutter set. The method works, but takes more time and effort than pulling out a nail with a pry bar.
My first choice is to use the whole pallet when I can. That, of course, is the easiest.
In second place, I'll break down the pallets to use the boards on many projects using the circular saw method leaving me shorter plank pieces with no nails to worry about. I usually take more time to use a crow/pry bar to remove the nails from the 2X4 stretchers.
With the Sawzall method. It's easy to punch out the nail heads from the planks, and usually I can use the 2X4's without cutting them in a project - so the nail bottoms left in the 2X4's do not matter.
However, If I absolutely needed to remove a broken nail or screw embedded in the wood, then this method is a great option. If you are repairing wood furniture, then this is probably one of the best methods I have seen to remove broken bolts/screws/nails.
I don't expect I'll be using this method very much, but it's nice to have it in my mental toolbox if/when the time comes.