I had a similar overheating problem with a Insteon 1000W dimmer in a 3 gang box along side 2 other Insteon relays. The overheating got to the point that the dimmer started to miss on/off commands from my controller and soon after the relay switch next to the dimmer began to fail as well.
After investigating and doing a little more research on dimmers and heat I found the cause of the problem to be:
- the switches were in an exterior wall and this was in the heat of the summer
- this was a plastic 3 gang box that was not a good conductor of heat and hence not a good radiator to disipate the heat
- the box was installed tightly between 2 studs
- insulation was packed around the gang box
To sum this up, my dimmer was generating heat, the exterior wall was already warm due to the outside temperature, and the plastic gang box was unable to effectively disipate all this heat.
To correct the problem I installed a metal gang box and removed some of the insulation from the wall directly around the box. Smarthome replaced the damaged switches and I have not not had a problem since. Note that the dimmer does still get pretty warm but the face plate and screws are not too hot to touch anymore. This has been working now for 10+ months. I am running the dimmer load at about 720 watts and both relays are running about 300 watts each so overall all I am probably at or above the recommended capacity of the 3 gang box.