A picture would be better than the description.

karalouise, Agreed, first of all to get a structural engineer involved to get the proper lumber sizing. You also may not be able to recess the beam if there is a bathroom above. There may be plumbing and or heat ducting in the way. You could certainly do a boxed beam pattern in the ceiling to play off the structural beam, it's done all the time and I think you could be very successful with an 8.5' ceiling. However, you need to be aware of how the beams will work into your upper cabinet layout. Will you do a soffit out of matching millwork so the cabinets bump into the soffit which matches the beams and crown moulding or? One thing you might want to consider is a half recessed/half dropped beam so it doesn't extend so far below the ceiling - maybe only 6" or so. This may be enough to re-route any plumbing or ducting that may be in the floor space. That way, you could still do your 8' high of cabinets with a 1" x 6" trim and crown for the soffit and return that back to the beam and false beams. It can be a lovely look!

I think whatever you do it needs to look like you intended to do it rather than you were stuck doing it, if that makes any sense. I lowered the ceiling to 7'7" in one bathroom rather than have a soffit running through it. The bathroom is small enough that you do not realize that it's not 8' and the flat ceiling makes the shape of the bathroom less complicated in a sense. I live in an area of row houses so there are lots of chases and soffits to be dealt with because of the typical construction practices.

Still haven’t decided. This is what it looks like currently with paint and all trim. It is growing on me. I imagine once backsplash and flooring and pendant lights are in, I won’t notice it as much. But I don’t want to regret not having him fix it forever. Builder has offered to move soffit back to be flush with cabinets and we will put a piece of flat trim at cabinet and soffit joint. He did mention being concerned with the possibility of damaging cabinets in the process. He also said he would remove soffit altogether if we want. Again the only concern being the cabinets potentially being damaged. I have to decide soon.