Thanks for the help. After some thought, how about we scrap the above and start from scratch. I don't want that soffit to be in there, and I'd rather spend more to make a room elsewhere in the basement. The most expensive thing I can do is make a brand new room, but the 6' 10" ceiling height has to stay. I cannot afford to dig out the basement, I assume that is very expensive. I already have to take out a loan to do this.
Here is my current room, as you see it's an acoustical disaster when it comes to lower frequencies. Even with two subwoofers, there's only a very tiny spot in the room where I get the desired results, exactly 38% from the rear wall. However my room is too small for this and the sofa ends up taking up the entire room. I have no room to customize my setup due to the sheer size of the room.
This is option 1, it's the cheapest to achieve without the overhang on the ceiling. It has some issues where some frequencies are overlapping which can probably be fixed with audyssey XT32. However, it has much much better bass response than my current room.
This is option 2, which appears to be the best and most acoustically accurate I can get with my ceiling height, but also would require me to move a wall less than a foot to achieve. This makes it the most expensive option, but I am leaning towards this option.
In all new setups, the entire ceiling would be drop down. My current room is drywall. I'd likely invest into tiles that are designed for home theaters and work to help sound rather than hurt it. 55-65" HDTVs are my only option. Why? Because I connect a PC to this setup for games and web browsing. Projectors sadly have too much input lag for this.