I just put up 4 "on-wall" M3s for Atmos/DTS:X literally last night. I went for "scientific accuracy" over aesthetics otherwise I too would have looked closer at in-ceiling speakers... Well, technically I DID look hard at in-ceiling speakers, but with my soundproofing for my ceiling, there wasn't enough room between hat-channel and ceiling joists to make them fit, so they were out.
One note, the tweeters on the in-ceiling M3s ARE aimable, so that should help in your situation a little bit, not enough for front heights though...
I have a question for you. How many rows of seats do you have?
If you have more than 1 row of seats, check this out:
Dolby Atmos: Dispersion Requirements for Ceiling Speakers Nyal is really, REALLY good at what he does with acoustics and speaker placements. As he mentions, there are changes coming to official Atmos documents later this year for new recommendations of placement locations, and Nyal has been sharing those locations based off of 2 rows of seats, and this document is what I based my speaker choice and location off of.
If you went with in-ceiling speakers, unfortunately, putting them at the front height location, even with aimable tweeters, will still most likely be pointing sound towards the ground in front of your seats, which won't be very good.
Top Front and Top Middle would have been better, but if your receiver can't do it, then you can't do it.
What about keeping regular M3s in the front height spot, and a pair of in-ceiling speakers to replace the other ones?
