I am considering replacing my gas fireplace which is more for looks than heating. I am considering installing pellet stove insert in place of the gas fireplace or a Heat Pump. Just looking for something that is cost / energy efficient. ANy Recommendations or expirences would be helpful. Forgot to say that I currently have gas forced air. And the furnace is on the small side for the house and is 10 years old. During the winter it will run almost continusly on the cooler day it has a hard time reaching tempeture.

In your decision making you should separate a "whole house system" (furnace, heat pump) from a "supplimental" system (pellet stove, fireplace, vent free, etc.).

Heat pumps are efficient for heating when the outside temperature is above 25-30 degrees. Below that, you are not gaining efficiency.

As for supplimental heat, there are many factors to consider, so ask a lot of questions at your local dealer - and describe your current system and house layout well.

Just last year I upgraded my traditional fireplace to a gas vent free insert (98.xx efficient, I think).

I just love it... so it might be an additional think you may want to consider.

I am not sure the heat pump would be a good choice as a supplement in the coldest weather, of course, depending on how cold is cold.

You don't say how old the house is. If it is an older house, upgrading the insulation and meticulously sealing it up might give a much better pay back. Good windows could make a big difference. Cut air infiltration, and your house will be both warmer and less dry, making it more comfortable.

It is possible the furnace was undersized because somebody didn't allow for excessive heat loss.