ISO Example Home HVAC Control Schematics and Circuit Design Info
After reading a few posts and doing a little testing with a DMM, I believe I have solved my questions concerning how a home thermostat works. First the posts/info that led to the conclusion:

RiteTemp Installation Guide (pg 17 - 4 Wire Heat/Cool No Pump)

JohnSAZ from EEVBlog:


  Of course your thermostat may be
  different but every one that I've ever
  looked at worked the same (and your
  color codes pretty much indicate an
  industry standard setup).
  
  Think of the thermostat as nothing
  more than three switches. The "RH" is
  your common. If you short "RH" to "G",
  your blower fan will turn on. If you
  short "RH" to "Y", the air
  conditioning compressor will turn on.
  If you short "RH" to "W", the heater
  system will turn on. This could be a
  gas burner solenoid, or relays to
  energize resistive electric heaters.
  If the unit is a heat pump, it will
  turn on the air conditioning
  compressor, but it will also energize
  a reversing valve that will make the
  freon run the other way around
  (kinda).
  
  Obviously you need to ensure that the
  "G" and "Y" leads are NEVER turned on
  at the same time. You also need to
  make sure that the eater system can
  not be turned on with the blower off.
  Also, you need to make sure that when
  the compressor turns off, it is not
  allowed to turn back on for some time
  (10 minutes? don't know the time limit
  for sure). Also, higher quality
  thermostats keep the blower running
  for some time after the compressor (or
  heater) has turned off to suck every
  last Btu out of the system before
  shutting down.


I grabbed my trusty DMM and confirmed that W, Y, G, and C all measure 30VAC+ when tested against RH (or R) - GND. When the system is running, G drops to 0.05 for both heat and cold (meaning the fan is running). W drops to 0.05 if the heater is running. Y drops to 0.05 if the Cooler is running.

I still need to research the appropriate timing for cooler/heater shutdown etc.

If anyone can think of any additional circuit protection outside of what JohnSAZ noted, please let me know. I am interested in adding a fail safe to the circuit design in case the unit fails. Not sure if relays in off positions during power outage would take care of business or not. Either way, I do plan on providing battery backup to the project just in case (IE. detect power failure, disable all controls).