I can't assist in the outdoor portion of your question, but we recently replaced indoor soffit 65 W incandescent can light bulbs with LED and 4 LED bulbs provide more light of better quality than the 6 incandescent in my opinion.
Yes, under a soffit would be a damp location, not wet. I dare say most trim/can combinations are rated for damp locations, even open ones.A soffit like that is considered a "damp location", thus requiring the use of fixtures that are designed for some amount of water exposure. Any fixture that can be used in a shower can be used there. LED is a great idea considering the maintenance difficulties of that kind of location.
They make new work with the hanger bars and frame, and old work that get cut in later.Great input all, thank you.
Looks like the Halo H99ICT could be the right one? Do they make one without the hangers, or are the hangers needed for the install? An electrician will do it, but curious.