Also talked to my HVAC service guy who's father owned the business before him and had done the installation of the oil furnace on this house for previous owners waaaaaaaaay back in the 20th century
Doesn't matter what he says. 20kw is a huge amount of heat.
Equipment is not undersized unless it can't keep up in the coldest weather you get, set up correctly and running continuously.
Did your 10kw system have trouble keeping up?
If yes, have you done everything within your means to reduce heat loss?
The way to size is with a load calc.
If a house of this size Oregon (which doesn't seem to get very cold) needs more than 15kw, it's really poorly insulated or has very high ceilings, or tons of glass.
As far as the 5 ton goes it's not for the cooling except for maybe a couple of weeks each summer but for the benefit of a high HSPF. However, I believe you sir are right and that 5 ton is oversized for this house (another oversight on my friend's part) and I'm in the process of trying to change the order to a 4 ton.
You have to verify your duct system can handle the 1600 cfm a 4 ton unit needs.
As a frame of reference, 20kw may be okay with 1200 cfm. (actually manufacturers recommendations vary)
The load calculation is good for sizing heatpumps because you can determine the balance point, below which strip heat is required and decide what makes sense.
You need to make sure the components you're using are approved matches and ideally use a thermostat that supports staging backup heat, and locking out strip heat when it's too warm.
Really, this isn't very diy friendly - i with knowledge of the theory but not being an installer wouldn't do this myself. It's not worth the risks and hassle; plus all of the equipment you have to buy to do the job right can really cut into your savings.