I'd vote box extenders, as for shimming or whatever, if the tiles are cut just like the drywall would be, the ears of the switches and outlets should rest on the tile, bringing them out to the right level. I just re-installed outlets and switches in a bathroom when I tiled it, and noticed that the cover plate screws hit the tiles before the plates were properly tightened down. This could crack the tiles if they got tightened too much, so you may want to notch the tiles where the cover plate screws are going to be. In the end, I used a dremel with a rotary tile file, which did the trick.

I have horizontal outlets. It was actually my electrician who suggested they be installed horizontally--he said they look better that way. Also, my electrician said that local Code specified they be a minimum of 4" from the center of the outlet to the countertop, although I understand Code varies by region on this issue. I find the height excellent since it is unobtrusive, I can easily hide the receptacles behind the paper towel holder, coffee maker, etc., but not be nervous they are so close to the counter (though the ones on the sink side of my kitchen are all GFCI so I guess that shouldn't matter). I only have one switch; it is for my undercabinet lighting--my disposal is a batch feed style disposal which does not need a switch. My light switch is vertical and set higher up than my receptacles. I've never noticed, or thought that it looked weird to have two different heights, with one vertical and the rest horizontal. But maybe cause I only have one switch. IMHO you should do what you can to install the receptacles lower and horizontally, so as not to interrupt the middle of your backsplash. Note: this photo shows my receptacle that is on the opposite side of the kitchen from my sink, so it is not GFCI.

The receptacle box extenders come in all sizes from 1/4" to 1.5" thick, so you can get exactly the depth you need to compensate for how thick your tile + mortar is. You don't have to nail them -- just lay them over the old box and screw them to the box using the same screw you're using for the receptacle itself (you might need a longer screw, they sometimes come packaged with the extender). I'm not sure the big box stores carry them (although they should); if not, go to a regular hardware store. I learned the hard way: definitely get those little ears on the outside of the tile, otherwise nothing will fit correctly when you put it back together! :-)

Thanks Circuspeanut! I just adore your kitchen. Looks like the kitchen that's my paint-inspiration (Sally Wheat's) uses vertical plates on subway tile as well! See pic below... Also Circuspeanut, you've just inspired me to possibly do my outlet/light switch plates in nickel! :) I've been wondering whether or not to do a nickel color or a white color, because my backsplash will be mostly white subway tile (the white calacatta marble subway). I was worried the plates should match the backsplash to avoid looking too busy and take away from the tile...and was also concerned that with having a stainless counter, faucet and polished nickel bin pulls/latches, nickel plates might be overkill. But your copper counter w/ copper outlet plates - and non-matching tile - is really pretty. Love it. Hmmm... my countertop will be stainless, my faucet is polished stainless (not chrome, not nickel), but they don't make stainless switch plates. So what will match better - brushed or polished nickel?! :-p As for considering having my plates be white, they don't make plastic plates for the push-button style. However, they do make porcelain white plates (as well as other great colors, FYI everyone) which is another thing I could consider, only they're a bit chunky and probably from the 1940's period...still kinda cool though. Only those have the outlet plates but not the pushbutton plates. But hey - I just found white painted metal ones!: http://www.kilianhardware.com/swreplinwhpa.html Here's that Sally Wheat kitchen (for the thousandth time):