We are planning a small makeover for the only bathroom in our small house. We plan to do the following:

1. remove the flushmount ceiling fixture and patch ceiling
2. add an exhaust fan with light over the shower
3. add two recessed lights: one over the toilet area and one between the doorway and the vanity (evenly flanking the vanity)
4. replace the vanity light with a more appropriate sconce
5. remove the wallpaper; paint walls
6. shiplap and paint the ceiling

I'd like GW help on the following:

1. What size recessed lights are appropriate for this small bathroom (barely 6x9)? Two 4" or two 6"? I like LEDs. What brand do you recommend?
2. Can we install this in phases, beginning with the recessed lighting and exhaust fan and add the shiplap at a later date? That is, can the fixtures be adjusted lower to accommodate the wood planking when we get to that phase?
3. If the new recessed lighting offers downlight, should we plan on installing an upward facing sconce above the vanity or can we do a downward facing sconce (perhaps with clear or translucent glass shades)?

Other notes: We will replace the hideous wall cabinet with open shelves. We are aware that the tile on the floor is wall tile and not floor tile (slippery when wet!), but until we build a second bathroom, we cannot replace it.

Thanks!