How do I determine/control which heat source is used (heat pump, oil)
A heat pump thermostat prefers to operate the heat pump under "usual" conditions as that is expected to be less expensive.  It will invoke the back up (or "emergency heat") when any of several conditions occur:


The current indoor temperature is more than 4 &deg;F/2 &deg;C cooler than the temperature setpoint.  This is the blockhead approach taken by primitive thermostats and intelligent thermostats when "anticipator mode" is disabled.
The outdoor temperature is cold enough that the heatpump can not operate inexpensively.
The "emergency heat" switch is enabled on the thermostat.


Some (advanced) thermostats might have an adjustable delta temperature value, but it does not look like the TH8320 does.  According to the installer manual (see page 17), there is a deadband adjustment, option 0310.  Besides directly controlling the deadband, it might also be used as the temperature delta or half of it.  Try adjusting the deadband, save it, and then adjust the setpoint temperature above the current reading (which will drift up as your hot hand and body will warm the thermostat) and see if the delta is affected.