Rodney from Hamilton Ontario asks "why is there a bulkhead over most bathtubs? Every home I remodel seems to have the ceiling above the tub furred down about one foot."
First of all Rodney, bulkheads are not a requirement of any kind and as far as I know, never were. In fact, they are a very regional design habit. As for a reason for being, other than the fact that in the old days people tended to build smaller more closed in spaces, they probably served the purpose of stopping a lot of bathroom condensation. In the old days there was no ventilation in the bathroom and little insulation in the ceiling. Hence the wall/ceiling joint above the tub was very humid and quite cold -- leading to peeling paint and mould. Adding an empty space between the moisture and the cold probably worked much like a double pane window, keeping the moisture away from the cold.
If you remove this bulkhead without the modern insulating practice of foam insulation over the entire wall on the outside, there is one part of this area that could still be a problem, right where the double header at the top of the wall framing displaces the insulation -- it is marked in red in this photo. This can be a cold spot, and particularly in a bathroom with little or no ventilation, you could get the old condensation and paint peeling problem.
Putting 2 to 3 inches of insulation directly on the ceiling will bring insulation down over the uninsulated double header at the top of the wall, or even some foam crown molding (the polyurethane used to make the moulding is a great insulation) over the wall/ceiling joint would warm up this cold area and avoid any condensation without having to lose a foot of ceiling height.
With either ceiling insulation, or polyurethane crown moulding, make sure they at sealed air tight so that no bathroom moisture can sneek behind to the cold surface.
WORKING ON THE OUTSIDE
If you don't want to loose any of that bulkhead space inside the bathroom, you could go into the soffits and cover the double header on the outside -- as you can see clearly in this article.