I think the root problem is the twitching. Ive seen other people do the same kind of setup and they didnt mention an overheating problem. If the servos are constantly moving then they will be drawing a lot more power which obviously makes the regulators hot. The regulators arnt getting very very hot. The heat is mostly coming from the servos. I think thats because the motors are constantly moving backwards and forwards and generating a lot of heat.

During initial tests with the special servo controller i operated them in the enclosed space and had no heat issues at all so im pretty confident its because of the twitching. One thing i didnt do before was test on this power supply. I will add the capacitors to see if they make any difference