I think solid wood would be the best. Plywood tend to separate if wet, and definitely avoid particle board or MDF!! For ease of working solid pine is a good choice. If you want to match existing decor, use hardwood & build it as you would fine furniture.
Plastic is another possibility, eg. have a solid wood frame & acrylic panels. <My canopy is made with hardwood with hinged access flaps made with 1/4" acrylic.> And you need to seal the canopy in & out with poly or spar finish.
I fill my tank to just above the lower edge of the top trim (so no water line is visible). I have a sump & I need the headroom in the display. With other filters, you can fill higher, up to the rim at the trim (where a glass top rests) - ie 1/2" or so to the brim.
Depends a bit on the light you have as to height of the canopy. You don't have too much difference in light as long as the light source is within a few inches of the water. Certain light (eg MH
) gives off lots of heat & you need to have it further away from the water (plus have airspace above the fixture so you can install a circulating fan). The typical PC
or T5 can be mounted right on canopy & be a couple inches from the water. However, if you plan to have lots of light (now or possible upgrade later), it is worthwhile to build the canopy taller than needed ... may be 9" or 12" so you have room for fans, fancy light, etc. <Esp. if you ever think you might change the tank to a reef.>