I would start by thinking about what primary sources you are going to have available to you and also what has already been written on by historians. Your idea about looking at Henry VIII's household would probably yield more sources than trying to look at the lives of his subjects at the beginning and end of his reign, as there won't be as many sources for a study of the lower orders (as most couldn't read/write, they just didn't generate as much written material as the upper orders). David Starkey has written quite a bit about Henry's court if you want to see if your library has any of his books.
The religious change idea sounds interesting, but I would imagine an awful lot has already been written on it by historians. It's also a huge topic which you might struggle to do justice to in a dissertation, especially over the course of the entire century. You mention looking at the historiography, but I don't think you want to get pulled in to just providing a literature review.
I would have a chat with your tutor/advisor of studies and see what they think. The only other thing I would say is that the Tudor period is pretty long. You could consider something on Henry VII, Edward VI, Mary I, Lady Jane Grey or Henry VIII's siblings, Arthur, Mary and Margaret. Henry himself, plus his wives and daughter Elizabeth have already been very heavily written about by historians.
Best of luck with it :-)