A lot of off-the-shelf rackmount chassis have in the neighborhood of 1.25" inside. Remember, 1.75" is the height of the faceplate but the chassis has to be less than that or they wouldn't actually fit. On top of that you need some extra clearance to accommodate adjacent gear made by numbskulls who don't know the diff between a flathead screw and a panhead screw so you might want the chassis to be about 1.5" tall. The thickness of the lid and the bottom panel will cut into that, so you're lucky to have 1.375" when you're done. That's just barely enough for a 1/4" standoff, 1/16" PCB, and 25mm-tall capacitors and other components.
Now remember that the tops of radial lead caps often are bare metal that often has voltage on it. You don't want it mashed up against the lid, and you sure as hell don't want it poking through a hole in the lid. (sorry josh)