We have an open loop water source heat pump, and the supply ductwork is in the trusses above the ceiling insulation. The ductwork is insulated, but not all that well, maybe an R-20. So, the fan blows cool air for a minute and a half while the TACO valve opens. Does anyone see a problem with adding a pair of relays as shown in the attached drawing so that the fan signal is delayed?

Many A/C outdoor units use a time delay and I believe it will do the same job but cheaper and easier. Look on Ebay for one of these then just wire it in the green thermostat circuit. http://cgi.ebay.com/New-Watsco-Adjustable-Delay-Make-Time-Delay-Relay-/320602881165?pt=LH_DefaultDomain_0&hash=item4aa56b bc8d

You need the delay on make style and wire it into the green blower activation wire. Since it is adjustable you can play with the amount of delay till you are happy with its operation. See this also. It shows the amount of time delay available. Just follow the simple directions

http://af1ac.ecrater.com/p/2236045/delay-on-make-timer-replacement-icm102b-for

I have done this setup before BUT it will be up to you to make it work with your system. In the diagram you posted I do not see a timming delay device only a relay so I have no idea how you would make the setup you posted work as a delay.

I am also under the assumption that your thermostat is using a 24 volt circuit if it is 120 volt powered just follow the package directions to solve that problem.

Calling it a "fan delay" is a misnomer. I should have called it a "valve delay eliminator" because it lets the fan signal through only after the valve is open and it is dependent on the Y signal.

Yes, it is a conventional 24 VAC system. Might not my circuit be safer than a time delay because it is dependent on the Y signal, not separate from it? With a time delay relay, you could have the compressor on with no fan if it were adjusted wrong.