You can frame pretty tight, but not flush...

Can I put wallpaper over them?

You mean directly on the ducts? I think if they'll have hot air flowing through them, then they need a little buffering space before any finishes... As I say, I think they need to be framed, but you don't need 4" walls, just a box of one-by's. Probably an expert will suggest specs.

Thanks I was trying to think outside the box!

Also, once they're drywalled and painted, new soffits start to look less like Shocking Intrusions On My Living Space and more like Invisible and Boring Features of the Ceiling. :))

Not on 3 sides of of a VERY narrow room

We ran all of ours along the wall to keep them from interfering with the ceiling height because we had a low ceiling to begin with they were framed in with small dimension lumber