When I did this some years ago, I furred in the AC duct on the sides,
and paneled it. The bottom of the duct got the ceiling tiles. Does this
make sense to you?
In a somewhat similar situation, I had a steel beam in a cellar in a
summer place to deal with. Boxed it in with rough cut 1" stock, stained
it to match the paneling. Suspended ceiling in the usual manner.