You can remove everything and then texture, paint and put can lights in the recessed part. That's what we did as a quick fix to an outdated light and it was inexpensive.

You might get lucky, as when we removed our metal brackets and the plastic...inside the recess was already textured and primed. We just had to remove the lights and with minimal repair to the drywall it was ready to paint. Then DH added some can lights inside.

Made the kitchen feel taller too.

a quick / easy fix for now would be to change the yellowed panels. you can get new ones at HD or L's. they also have replacement fixtures.

later on you can go with patching the ceiling and a new light fixture - after the budget recovers.

".inside the recess was already textured and primed. We just had to remove the lights and with minimal repair to the drywall it was ready to paint"

that'd be great! hope the OP finds that when checking out her fixture.

I have 2 of those and if that's what we find I'll be changing mine out - maybe next yr. I'm too tired and poor this year. and I don't mean just when the yr # changes!

I've looked inside the box - it's yucky painted (or not) plywood.

I like the "add drywall and can lights" idea. I'll run that idea past my long-suffering handyman/contractor. And SO, who has an unreasonable fondness for fluorescent lights.

Although this is appealing, if you ignore the total lack of crown molding anywhere else in the house. Just clean up that box, call it a recessed ceiling and add a chandelier.

A pocket friendly option would be to buy decorative lighting panels. They update the room without breaking your budget. USA Skypanels has quite a few options of images & I'm sure if you don't want a design that they have plain ones.