Can you completely remove the soffit? Would need/want new upper cabinets, and that might spiral into a larger kitchen reno. But if you hate the soffits, no time like the present to axe them!

Task lighting for the work zones is important. 450 lumens at the counter surface is a recommended minimum. Because you have a lot of uppers you might be able to provide light using undercabinet led lighting. A led can light or two over the sink should work. DMF is one source for high output led can lights. Home - DMF Lighting

Want does you’d remodel consist of? The soffits (both above the cabinets and holding the lighting) are terrible and would be the first thing I would address. Far more important than a wood ceiling.

The seven or so different wall colors/ materials only emphasize the architecture. I wouldn’t entertain the idea of adding yet another item thinking that it will somehow tone down all the other items.

Remove the soffit entirely and create a lighting plan without it.

Do not add any finish to the ceiling unless you extend it beyond the kitchen.

At a minimum, paint all those different spaces the same color.

Remodel has so many layers.I remodeled using same footprint but had kitchen gutted, soffits removed, new lighting and cabinets, counters, appliances. Then paint. We need your scope of work before being able to offer specific advice.

If you removed the lower soffit and had taller cabinets that went up to the top soffit that would give you extra cabinet space. If you remove both soffits it will feel like short cabinets in a cavernous room not “homey“ as you want IMO. A T&G wood ceiling would look great but might look odd if it stopped at the end of your kitchen.

I would leave all the soffits and paint them all the same color. Always nice to display somethng special up there.

Yes remove the soffits and install 42" cabinets, raise the wall on the fridge side, and if you want to make this kitchen pop put the windows to match the roof slope on the exterior wall, I left the wall on the fridge side, but you can have a trim detail done above there, a painting, or make a trimmed opening, etc...something like this to give you an idea

soffit needs to go. that will open up the kitchen and make it look bigger. The recessed lighting is spaced too close together. I just removed a "cat walk" (ceiling structure that housed flourescent lights that reflected upward) in my kitchen, and it was the best decision that I have made in this whole remodel.

Hi! I think your kitchen has a very nice personality - just a few adjustments. The pink and yellow combo is adorable, but I understand ceiling needs to be reduced - a yellow flat ceiling might help. You could use that gap for storage, with access either from the kitchen ceiling or the living room wall.
I agree with those who suggest to remove the grey soffit. The pink gap that would result out of the removal, wouldn’t bother me.
From the picture is not really clear how the walls close up but I wouldn’t mind either to pass through a lower doorway from one to room to the other.
Hope this helps

Op has never returned since posting

Hallett, it was only yesterday!