A 4-inch would be best for your powder room to create a minimal intrusion effect. Also, if you want a balanced lighting, I suggest you to try the tube string lighting. This creates a simple and light ambiance in your powder room.

Yes, I'm with mattandrews. I think a few recessed lights would be a lot of light for even a larger bathrooms wall. Have you considered using track-lighting to highlight your tile? Here is an article I found that roughly describes different types of lighting. I hope it helps.

Here is a link that might be useful: Del Mar Fans - Lighting Types

Not sure what the tube string lighting is that Matt suggested. Is that the same as rope lights? Not sure how that would be used in this space.

I ordered 3 4" recessed LED lights, But I'm not sure if 3 is going to be too much for a 5-2 wall. I figured I could add a dimmer if it seems too harsh. I may see if DH can hook up 2 of them to see what it looks like, and then we can add the third one if needed.

I am also now considering the 4" recessed lights for over our bed and nights stands, instead of lamps or the wall hung swing arm lights we have now. Our night stands are very small 18w x 15d so I don't think table lamps would be a good idea - no space for anything else. I'm not really big on pendants. And with the remodel, I want to place windows behind the night stands on either side of the bed so the wall mount swing arms won't work. I could put wall switches to control them on the wall between the bed and nightstand - one on each side. And a third switch by the bedroom door.