How did the 737 become a 2-crew plane?
Excerpt from "First-Hand: Evolution of the 2-Person Crew Jet Transport Flight Deck"


  Early in the preliminary design effort, Boeing had taken a careful look at the in service performance and accident history of previous airplane designs. The conclusions were interesting:
  
  
  In flight troubleshooting sometimes led to more serious problems, occasionally jeopardizing the safety of the flight.
  The flight engineer’s intense focus on systems problems often distracted one or both of the pilots, sometimes resulting in no one “flying the airplane.”
  Jet engine reliability was much higher than piston engines and they required little or no in flight troubleshooting or adjustment.
  Certain high workload periods during departure and arrival left little time for outside watch nor much time for handling abnormal events.
  
  
  
  In support of industry work to establish rational external vision requirements for transport airplanes, Boeing developed a computer model that determined the relative collision threat value of the visual space around the aircraft. Because airplanes are in motion and at a positive angle of attack, the computer model showed that the collision threat is concentrated generally forward and below the longitudinal axis of the airplane.
  
  In response to these findings the design team took a different approach to the 737 flight deck:
  
  
  A concerted effort would be made to simplify systems designs to increase reliability and to eliminate or greatly reduce the need for in flight trouble shooting.
  A Flight Deck design group would participate in all flight deck design decisions and would have considerable authority in the design of controls, indicators, and operating concepts across all airplane systems.
  Workload assessment would be used as an integral element of design to adjust functionality and location of equipment and controls.
  Operating procedures would be simplified and shortened to reduce distractions and provide ample time for outside watch.
  The autopilot would be improved to better support operations in the terminal area not just in cruise.
  The pilot’s stations would be designed to maximize external vision in the primary collision threat zone.
  


So it seems that a lot of the changes that facilitated the movement to a 2-crew flight deck were procedural ones rather than engineering challenges. Jet engines by that time didn't require constant attention and adjustments. It seems that this movement towards a reduced cockpit count was the result of "too many cooks in the kitchen", and while not explicitly mentioned it seems like Eastern Air Flight 401 was a driving factor (Edit: or at least they wanted to prevent something like that, turns out EA401 didn't happen until 1972 when the 737 was introduced in 1968).

I'm guessing though that this won't completely answer what you are looking for, I'm sure you'd want to see the specific input that the "Flight Deck Design Group" offered for the placement of controls and indicators. I guess one way of figuring this out would be to compare the cockpit layout of the 727 and 737, as far as I can find, those design decisions aren't published.