Given the environmental impact and cost-efficiency challenges of the conventional central District Heating (DH) systems, there is a shift towards hybrid solutions. The demand for small-scale Heat Pumps (HPs), integral components of these systems, has surged due to their electrically driven, cost-effective operation, and potential to meet environmental goals. This paper conducts a systematic literature review by investigating and highlighting hybrid heating solutions and their role in decarbonizing the built environment. It compares and discusses the potential benefits and challenges of various hybrid HP-DH systems against conventional DH-only heating approaches. The study evaluates these systems based on economic, environmental, and energy efficiency aspects, and it explores the use of intelligent and AI-based algorithms. The results indicate that, from an economic perspective, the hybrid approach can potentially offer cost savings over the long term, considering factors such as initial investment and operating expenses. The findings of the reviewed works suggest that in a DH-HP configuration, an operational cost saving between 5% and 27%, and a CO2 reduction of up to 32.3% can be achieved without additional resources. Additionally, the environmental impact analysis indicates a significant decrease in greenhouse gas emissions, aligning with global efforts to mitigate global warming.