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People are going for GU10 LED's now. If you need to change from 12v Halogen to LED and want a relatively cheap and simple pathway then the Integral Evofire frame is great, there's a version which works with insulation or one without.
They are IP65 and fire rated and also fit any hole from 70mm and have a 100mm bezel to cover the issues you get when pulling the old downlight frames out of a ceiling. Just add a GU10 led dimmable lamp in warm or cold white.
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All LED MR16 bulbs have built-in rectifiers and will happily take 12V AC. The problem is the electronics in cheap drivers will only work properly with a halogen-sized load, and misbehave otherwise.
Transformers that are powerful enough to drive halogen but also stable enough to drive LED are rare and expensive, so you have to pick one or the other.
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Airhead
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@Nef
So a bit of reading tells me that 12v ac was the old halogen standard, some leds will work with old ax halogen drivers, but dc is the newer standard and most led bulbs will be dc.
This is why I hate domestic.