never been a fan of 2 man bleeding. I cam across this a few years ago and use this method for brake bleeding and have never looked back
http://www.fullsizebronco.com/forum/showthread.php?t=140620
build one of these and bleed your brakes. after reading this thread I am leaning towards air in the lines or you got a bad MC off the shelf.
This method will quite literally kick ass over gravity or worse...Vacuum bleeding where cups can be pulled inwards drawing in air past the cups (though likely not happening in most situations)
I'll be making one of these and purchasing a few caps for this method or making adaptive plates of sorts that will work for those old Iron dual chamber MCs.
This unit will actually also work well for clutch slave bleeding too I believe


making short work of that...so another adapter 101 to fab up...
From a pressure test that held sufficient pressure on the MC, then the only conceivable thing left is a wheel cyl or caliper that is awry. By that if a rear wheel cyl is working correctly but somehow the brake shoes are not fastened on the bottom but in the groove of the pins on the cyl with the return springs pulling back then the wheel cyl...could conceivably move more because the bottom of the shoes are not aligned correctly...just some speculation here...this is puzzling...NOW
One more thing, and it's ******* me off


that I cannot remember where on the net I read it. There is a TSB about this and how the MC is incorrectly sized. It will not provide enough volume to make the brakes function. It is a little known issue but there is a TSB about it. I cannot recall what year it was or where but this could be an issue that your hitting.
How about checking that MC piston size...then see if that's the correct one or if there is a recommended replacement of greater size?
JM2CW