2001 Rx300, AWD.
I had rear brakes squealing and the pads looked close to replacing, so I replaced it.
But the squealing continues with new pads and its loud. This only happens when I am soft on brakes.
Will machining down rotors help ? Need some advise.

Re-finishing the rotors should help. My friend's Accord had the same problem and it helped.

Sometimes old brake pad material can "etch" onto the brake rotors. Simply have the rotor surface cleaned.

Note that this is different from re-surfacing the rotors, which you do only when the rotors get warped.

What brake pads did you use? FWIW, I had my brake pads and rotors changed at Lexus recently, no squealing noise.

Brake systems on 01 RX receive very little complaints. The pads seemed to be designed so the fronts and backs were evenly and under most cases don't require replacement till over 70k. The stock Lexus pads have have good stopping power, have little dusting, are quiet and long lasting, so I see little reason to go to after market pads. When you changed the pads did you remove the shims from the old pads (2 per pad), clean them, coat them with brake grease and reinstall on new pads. There are also 2 bolts with rubber boots that the caliper slides on. The rubber boots should be in good shape and the bolts clean and greased under the boots. This will allow the caliper to slide freely. As long as these basics are in place, machining the rotors would be a logical next step.

Actually, my new Lexus pads generate tons of brake dust. I used to clean my wheels every other day, now I've given up. The dust actually gives my wheels a graphite-like finish. Looks very cool.

I also had tons of brake dust when my RX300 was new.

I do get some dusting on both my 00 and 01 RXs with both the original pads and the Lexus replacement pads but I always condidered the dusting to be much less than other cars I have owned. I also don't see many complaints about dusting on the discussion boards compared to other brands.

Thx for the advise I'll get rotor surface cleaned (assuming refinishing is the same thing).
The brake pad and shims were purchased from Lexus, original part, my friend change them for.

Don't cut/machine your rotor if it is not needed. Thinner brake rotor heat up more easily to cause it to warp. Just apply the anti-squeak grease on backs of brake pads and see if the noise goes away.
If you are interested in low dust, low noise, use ceramic pads you will never go back semi-metallic, OEM or aftermarket.