I suppose the guy offering free pallets is expecting you to take them apart and rebuild them into 4x4 pallets? Usually pallets are made from low grade lumber purchased from local sawmills. This is usually framing lumber--2x4, 2x6, etc, in the low grades that the pallet mill will rip and chop into pallet stock.
Depending on where the pallets go (stay in the US or go offshore) the lumber may need to have certification that it has been "heat treated" to kill bugs and parasites that are in wood. This is required even to ship lumber between the US and Canada. Not sure how this would be handled using recycled pallet boards.
I've understood that the pallet buz is high volume, very competitive, and can be costly as your competitive edge mostly comes from highly automated equipment (which is expensive). Or very low cost labor...which is almost nonexistent in North America!
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