UNless you want to reroute he plumbing you do inderneath it and BTW IMO you either do picture frame molding or a gallery wall not both BTW I do not love gallery walls they are insulting to good pieces of art and I think family photos are not a good idea in public spaces . I would just a fabulous piece of art a big as possible and be done.

Right on with @Patricia Colwell Consulting. Finding a fantastic large piece of art for that wall will really change your space. Your gallery will look lost here. Gallery walls just are never a good focal point unless they are done with large, well framed pictures.

The soffit isnt weird, lots of homes have them, you are just focusing on it. Hang art on the wall. No one else is noticing it, just saying,and with a nice big piece of art the focus will be on that.

It may look a little more integrated if you connected the ends of it to the walls, if possible, rather than having it hanging just in the middle.

Question for you as we can't see the rest of the space. Is the table/chairs in the correct position? Should the table be horizontal with the wall?

As @palimpsest said, it will look more intentional if it goes wall to wall. Also, it looks like your wall and ceiling paint colors are pretty similar, but if they're different, make sure the soffit is painted the wall color, not the ceiling color (all surfaces). That will help it blend in better. Since it looks like this is your dining room, here are some pictures of what others did with a large empty wall in their dining rooms:

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