Something like the following could be embedded. The difficult part would be finishing the ceiling.

Here is a link that might be useful: Essentia surface cylinder

Thanks for reply David. I actually came across that in my search and thought the same thing. Great minds think alike :) I have a sample on the way of this fixture from Progress lighting....

http://www.cesco.com/b2c/product/565315

It seems Progress has a patent on the locking mechanism. This locking method would allow me to cover the exterior of the can without interfering with the standard "friction winged" design. The depth is what I am concerned about as it says only 1" ceiling accommodation. Its datasheet drawing suggests I may get away w/ at least 2 inches though. I'll keep you posted.

Thank you so much for reply!