I live in Seattle, WA and have a very old Oil furnace. Trying to make the house more energy efficient by using an oil furnace/heat pump combo. Does anyone have product information and can someone suggest the appropriate unit sizes for house square footage? Thank you!
Oh and we can't afford to swap out to Natural Gas as we would have to overhaul our entire house and live far from the gas line on our street.

Make sure a Manual J load calculation is performed. Don't accept a Rule-of-Dumb sizing procedure. Also, have them check your ductwork to make sure it is sized properly and sealed to prevent air leaks.

To set the unit up properly to save you the most money on operation, your contractor will also need to calculate your thermal and economic balance points. There will be an outdoor temperature sensor that will send a signal to turn off the heat pump and start the oil furnace. This also shouldn't be set at a random number "because it works ok". I'm sure you're doing this to save money during the winter on your heating bill. Have them show you their calculation and graphs to prove they know where to set the outdoor thermostat.

Heating oil contains more btus than propane. In my area, fuel oil is $3.23/gallon, Propane is $2.60/gallon, and electric with all taxes and misc bull charges comes in at $.10/kwh

Calculations for an 80% efficient furnace and a Heat Pump with a Coefficient of Performance (COP) of 3.88 would be:

Heat Oil: (1,000,000/138,000) x $3.23 / .80 = $29.26
Propane: (1,000,000/91,600) x $2.60 / .80 = $35.48
Heat Pump: (1,000,000/3413) x $0.10 / 3.88 = $7.55 (47 degrees outside temp)
Heat Pump: (1,000,000/3413) x $0.10 / 2.73 = $10.73 (17 degrees outside temp)


You can see by these calculations what it would cost to supply 1,000,000 btus for each piece of equipment.
One thing to remember is as the outside temerature drops, the COP of the heat pump drops as well. So, as it gets colder, it becomes more efficient to switch to your oil furnace.
Another consideration is that the outside temperature will get to a point where the heat pump can no longer heat your house enough to keep you comfortable and this might occur before you reach the point where the Oil furnace costs less dollar-wise to operate. Get a heat pump with the highest COP that you can afford. Brand doesn't matter. It all comes down to the installation.

If you find a contractor that will perform all these calculations, you will save piles of cash during the winter.

I need to replace my oil furnace with a new heating system. What should I do? I don't want to spend too much money, but would rather pay a bit more now and save on monthly bills overall. I also live in an old house with lathe and plaster walls and would like to keep them intack if possible - so no major construction.

How about checking on a heat-pump system for both heating and cooling.