What would be better to use with my dropped ceiling design (see attached)?

That looks great. I would suggest the 2X1/2" for the block design. You can use painted mdf board for the rest, or actual plywood for the frame. As for tube sizes..it would look best if the tubes ran the whole length of the sides for uniformity. From the ceiling, and esthetically, the drop distance will depend on your ceiling height. If you are using this on 8' ceilings, then you would not want much more of a drop than the lights and a couple of inches or it will make the room look closed in because of the lowered design. If it is used in a room with very high ceilings, then you can use a deeper drop because you have more play area. Just keep it sized for the room...it is a great look, but can become overbearing very quickly in a smaller room if not proportioned correctly.