The root cause seems to be that libwnck (the window list) is providing a size hint based on the desired width of the buttons * the number of columns (based on 25 characters visible), and gnome-panel using that hint to determine the vertical size of the switcher.
The patch here still has issues with more than 7 windows open as described on 152838 and 43066, which their patch addresses. They don't fix the hinting issue however, which leaves the window list set at a maximum height of [width of 25 chars * number of columns].
The root cause seems to be that libwnck (the window list) is providing a size hint based on the desired width of the buttons * the number of columns (based on 25 characters visible), and gnome-panel using that hint to determine the vertical size of the switcher.
The patch here still has issues with more than 7 windows open as described on 152838 and 43066, which their patch addresses. They don't fix the hinting issue however, which leaves the window list set at a maximum height of [width of 25 chars * number of columns].