I'm not an engineer, but to make things smaller, try another switching regulator than the MC34063. Higher frequency = smaller size.
* Edit: Someone here (Tim?) posted this a while ago on the forum..
Suggested alternatives:
Boost or flyback, offline under 100W: - UC3842 series, TOPSwitch, FPS, etc. Buck or forward, offline over 100W: - TL494, UC3524, etc.
Buck, DC-DC, external switch: - LM5085, TLE6389, LTC3824, LTC3810, etc.
Internal switch: - TPS54231, LM2675, LM5008, etc. There are many to choose from, and you will save greatly on the cost of other components.
One of these chips may cost $1-3, but they all use much smaller support components. The huge caps and choke looming in the picture will cost more in total, plus board area. Plus, these newer chips are easier to use. And these are just a few excellent options for the most common uses.