I do not see why it could not be, unless manufacturer directions say differently. If this is in a closet of a dwelling then we would need to review how close it is to the shelf.
I don't have original directions, but this is a Metalux luminare and I checked the PDF on the website and I don't see anything that says it can't, the models without reflector can be used for cove lighting also. This is not in a closet, it will be in a garage ceiling with painted wood around it.
The main reason for posting this question is if there will be a problem with heat, the luminares are a few years old and have P rated electronic ballast.
Why wouldn't you just use a flourescent fixture that was meant to be recess mounted?
That is a good point, but I already have 6 of this type of luminare and need a few more. I didn't want to sell these and get something else if I don't have to. But in the end if that is what I have to do, I will. That you know of does anyone make a drop in that is two lamps wide (not more that 8" wide) that can be put in a boxed out area made of wood, or IC rated. Above this will be blown in insultation.
There are florescent light fixtures that are designed to be cut flush into sheetrock. I would not have a problem with your install. The clearance around the fixture for maintenance and installation is a good idea.
Are the luminares that are designed to be flush cut into sheetrock also rated for wood? I wanted to leave clearance as you said for maintenace/cleaning, and to allow air movement for cooling.
My biggest concern is heat build up, I'm going to call the manufacture and see what they say, if no that is easy, time for new luminares. If yes, than I will run it past the local AHJ and see what they say.