To create an illusion of greater height in a ceiling, you paint the ceiling lighter than the walls and extend that lighter paint down six inches from the wall ceiling intersection.

What is the point of the insulation? If it's to add some soundproofing, it's not much use even when it's above the drywall; without the drywall it's no use at all.

I regularly visit two basement units with 7 ceilings , one with finished ceiling while the other has everything exposed and painted white. They both seem low to me, but the exposed is much noisier (no soundproofing as you describe).

One other thing to consider are recessed lights. Sound travels through those things. That's one drawback to having installed them in our finished basement.