My first floor ceiling is only 7'7"high. Why? Because the contractor suggested lowering it and I did not know better at the time. The problem is...the old existing ceiling with lathe/plaster is still in place and there is a 6-7" space between the old and new drywall ceiling. I think I am losing heat in this cavity and I am definitely loosing much needed ceiling height. What should I do? The quack contractor framed in a new ceiling with 2x4's, installed all the electrical and can lighting(18)within this space, did not insulate anything and covered it with 1/2 drywall that is showing all the seams. I am remodeling kitchen, bath and living room to include demolition of large fireplace. Should I tear down the drywall ceiling, demo the plaster lathe old ceiling and start new? What would you do? Any suggestions would be appreciated, thank you

You are not losing heat, especially if there is a floor above the first floor. But I think you have realized that you need more than 7'7". If you hate it that much, (and I would hate it that much) you just need to remove the new dry wall ceiling and the framing. If the old original ceiling is in good shape you could install new dry wall directly over the old. You may have some electrical issues (moving electrical ceiling boxes down a half inch, etc.) but it can be done.

Thanks for the response. I would definitely have to remove the old plaster/lathe as it is in bad shape and from time to time, I hear a piece fall onto the drywall ceiling. This is just wrong. I was just reading another thread similar to mine and his concern about the old ceiling not level is also mine. This house is a 1910 Cape Cod..definitely not level, undersized joists. I have already sistered in the basement and added to the main beam with LVL's.
Question: If I demo both ceilings, how do I finish the walls to the new height?
Thank you.

If your walls are newer drywall, I would not think that this would be an issue. Wall studs should go up to the old ceiling, and you would just splice in drywall and tape. If the walls are the older plaster you may have difficulty matching. Large crown molding (or other molding) could be used.