PP-g-GMA will be the best compatibilizer to improve the mechanical properties of PP and wood composites. For thermal properties you can use ZnO nanoparticles with due surface modification by cationic surfactants.
As compatibilizing agent, the best one for WPC (wood plastic composites) based on PP matrix would be PP-g-MA (PP graphted with maleic acid). For the kind of wood, I believe any kind of wood flour is adequate for this type of composite.
Also, for nanoparticles, we have found out that nCaCO3, nano talcum, and nanoSiO2 have great effects on mechanical and impact properties (all of them with compatibilizers). For barrier properties, functionalized nanoclays and cellulose nanofibers are also a good option.