All the cans I've installed have the solid flange, thus had to do the cutout before I could finish fastening the drywall. I guess it's not really required that you drop the flange, but I don't see why you wouldn't want to. At the very least, I'd prefer to have metal between the heat of the bulb and the ceiling material, be it drywall or drop ceiling panels.
[COLOR="DarkRed"][B]~ ToolGuy ~[/B][/COLOR]
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