Here is a some code to illustrate the problem. Notice that the editor
is twice as wide as it needs to be. I am at a lost on how to fix this.

import java.awt.*;

import javax.swing.*;

import javax.swing.border.*;

import java.util.*;

@SuppressWarnings("serial")
public class MultiLineListCellRenderer extends JPanel implements
        ListCellRenderer {

    private final JLabel preferredNameLabel = new JLabel();

    private JLabel[] possibleLabels;

    private Font smallFont = null;

    protected Border indentBorder;

    protected Border defaultBorder = getBorder();

    protected Font defaultFont;

    public MultiLineListCellRenderer() {

        setLayout(new BorderLayout());
        int padX = 10;
        int indent = 10;
        indentBorder = BorderFactory.createEmptyBorder(0, padX + indent, 0,
                padX);

        add(preferredNameLabel, BorderLayout.CENTER);
        defaultFont = getFont();
    }

    protected void render(Object value) {

        Resource model = (Resource) value;

        if (smallFont == null) {
            smallFont = defaultFont.deriveFont(defaultFont.getSize2D() * 0.8f);
        }

        String preferredName = model.getPreferredName();
        String[] possibleNames = model.getPossibleNames();
        if (possibleNames.length > 1) {
            if (possibleLabels == null) {
                int size = possibleNames.length - 1;
                setLayout(new GridLayout(size + 1, 1));
                possibleLabels = new JLabel[size];
                for (int i = 0; i < size; i++) {
                    possibleLabels[i] = new JLabel();
                    possibleLabels[i].setFont(smallFont);
                    possibleLabels[i].setBorder(indentBorder);
                    add(possibleLabels[i]);
                }
                validate();
            }
            int index = 0;
            for (String name : possibleNames) {
                if (!name.equals(preferredName)) {
                    possibleLabels[index].setText(name);
                    index++;
                }
            }
        }

        preferredNameLabel.setBorder(defaultBorder);
        preferredNameLabel.setFont(defaultFont);
        preferredNameLabel.setEnabled(isEnabled());
        preferredNameLabel.setComponentOrientation(getComponentOrientation());
        preferredNameLabel.setText(preferredName);
    }

    public Component getListCellRendererComponent(JList list, Object
value,
            int row, boolean isSelected, boolean cellHasFocus) {
        Color color;

        Component component = getRendererComponent(list, value, row,
                isSelected, cellHasFocus);
        Resource model = (Resource) value;
        if (isSelected) {
            preferredNameLabel.setBackground(list.getSelectionBackground());
            preferredNameLabel.setForeground(list.getSelectionForeground());
            if (possibleLabels != null) {
            for (JLabel label : possibleLabels) {
                label.setForeground(list.getSelectionForeground());
            }
        }
        } else {
            preferredNameLabel.setBackground(list.getBackground());
            color = list.getForeground();
            preferredNameLabel.setForeground(color);
            color = new Color(color.getRed(), color.getGreen(),
                    color.getBlue(), 160);
            if (possibleLabels != null) {
            for (JLabel label : possibleLabels) {
                label.setForeground(color);
            }
        }

        }

        return component;
    }

    private JComponent getRendererComponent(JComponent component, Object
value,
            int index, boolean isSelected, boolean cellHasFocus) {

        // Set this cell properties to the same as the list.
        setEnabled(component.isEnabled());
        setFont(component.getFont());
        setComponentOrientation(component.getComponentOrientation());
        setOpaque(component.isOpaque());
        setBackground(component.getBackground());
        setForeground(component.getForeground());

        Border border = null;
        if (cellHasFocus) {
            if (isSelected) {
                border = UIManager
                        .getBorder("List.focusSelectedCellHighlightBorder");
            }
            if (border == null) {
                border = UIManager.getBorder("List.focusCellHighlightBorder");
            }
        } else {
            border = new EmptyBorder(1, 1, 1, 1);
        }

        setBorder(border);
        render(value);
        return this;
    }

    public static void main(String[] args) {

        JFrame frame = new JFrame("JComboBoxExample");
        Vector vector = new Vector();
        vector.add(new Resource("Joe", "Smith"));
        vector.add(new Resource("Mary", "Jane"));
        JComboBox combobox = new JComboBox(vector);
        combobox.setEditable(true);
        combobox.setRenderer(new MultiLineListCellRenderer());
        frame.getContentPane().add(combobox);
        frame.setSize(200, 200);
        frame.pack();
        frame.setVisible(true);
    }

}

public class Resource{

    String name1, name2;

    public Resource(String name1, String name2) {

        this.name1 = name1;
        this.name2 = name2;

    }

    public String getPreferredName() {
        return name1;
    }

    public String[] getPossibleNames() {
        return new String[] {name1, name2};
    }

    public String toString() {
        return name1;
    }
}

Thank for pointing me in the right direction! However looking at the
source for the javax.swing.plaf.basic.BasicComboboxUI class, wouldn't I
need to subclass this class and overrided the getDisplaySize() method
since this is where takes the maximum size of either the editor or list
renderer?