Lighting, Light Fixtures, Ceiling and Exhaust Fans - Help with unique recessed lighting installation.

I want to install recessed lighting in the ceiling of a finished basement. The problem is that there is a cold air return exactly where I want to install the fixture. It is a very wide duct, about 30" and I thought I would create a round opening right up through the duct at 8"D. I would then fabricate a 8"D pipe in sheetmetal and insert it into the channel, seal off the top and bottom edges with flanges and duct tape. This will provide me witht he opening I need and the heat from the light can still disperse into the rafter above. Can anyone think of a reason that this is a bad idea?

This is not a good idea. Not only will this block a significant part of the duct, but, even more importantly, a duct is the last place you want an electrical fire to start (you won't be able to seal it off well enough). Codes are very strict here. Either choose a surface fixture or put your recessed light somewhere else.