As you can see, we didn't dig down. We have about 6' clearance, and the Mr. happens to be 6', so we are good. :) In all seriousness though, we didn't really want to get into underpinning and digging down just to gain a few inches. I think it's worth it if you're gaining 6 inches or more...and we just didn't need that much more height (or cost, or work). The purpose of this space will be a play area for Owen, a TV area, and a desk. All things you will be sitting for, so the extra height wasn't worth it to us at this point.
Already with the pot lights it is SO much brighter, and the drywall makes it feel like a room. Stay tuned for exciting changes like paint and flooring!!