Wendel:
May be a cost effective way to do job; materials and/or labor. Depends on the length of the HR's and the work to get from point A to point B.
You neglected to list the wattage of the recess; also are exhaust fans or fan/lights in the 2 baths?
Sounds OK.
As to AFCI's....unless you are in a state like NJ that amended the NEC...you need them
