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I just completed a project for a client that included a similar dilemma as the one you describe.
#1 DO NOT use foam insulation with out using sheet rock unless you like dangerous
house fires with deadly smoke and quickly spreading flames.
At a minimum it would be necessary to add a joist between each existing joist so the span between is not too far for installing the T&G or sheetrock. I would be willing to bet the cost to re-roof with foam insulation and install the T&G will be similar. Just get estimates for both and you will have your answer.
As far as lighting solutions go there are several options that a sophisticated contractor could install by installing the necessary wiring. The wiring can be hidden by adding architectural details to the existing open beam design that will look like they belong. I have done this sort of thing a few times on homes such as yours and an Eichler in the Bay Area. Another poster above referenced this iconic mid century developer who favored this open beam method of home design in entire bay area developments.
So many people before you have approached this very problem of insulation and lighting being added at a later date. Personally I prefer the roof insulation and integrated lighting solutions as opposed to sheetrock and cans which take away from the look of these homes. In my opinion it would be kind of a shame to cover up the open beam ceiling detail but that is just my opinion.
There are lots and lots of builders, contractors, and carpenters out there but few are able to think outside the standard box and fail at executing refined details and or solutions to integrating wiring and lighting into an existing open beam detail.
Choose wisely and good luck with the project.
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