More modern transformers are switch mode supplies (http://en.wikipedia.org/wiki/Switched-mode_power_supply). Switch mode supplies (like the OP describes) are smaller, run cooler, and (nowdays) cheaper than linear supplies.
The main thing that's happened is IC manufacturers have made switch mode controllers cheap, and reliable. As a result, most wall warts are going away, to be replaced by switched supplies.
In end when you are designing product that does not have any special requirements on power quality (like precision instruments) or customer expectation that it should be big and mostly empty (home AV stuff) it is simply cheapest to order SMPS wall-warts from China in bulk.
More significant issue is cost: you need power supply that supplies slightly weird voltage rails that essentially has to be custom, even off the shelf SMPS modules tend to be significantly costlier than wall warts and you don't have any reason not to just stick big transformer in there (even more so because you essentially don't care about regulation of the more loaded rails)
There is one tiny correction to your post that I can make; the reason why you order SMPS wall arts from China is because there are 20 places to compete on "12 volt, 2.1 mm coaxial jack, 1.5 meter cord" so you can play mfgrs off against each other, but there's not so many places willing to play internal mounting games WRT exactly where each plastic mounting post is located.
IF internal SMPS had something as effectively standardized as NMEA electric motor mounts, then you MIGHT see more internal power supplies because competition would be cheaper.
If the switcher was $0.50 more expensive, you were getting a linear even though it would cost you an extra $2/year in electricity. Consumers demand cheap initial cost in their electronics. The EU regulation just forced the upfront cost.
I would argue laptops were the killer app as far as switchers are concerned. Once they showed up and got popular, designers newly had reasons to design switchers more often.