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Fluid can only flow between the reservoir/cup and the lever cylinder when the lever is in the fully relaxed position. If you push the lever away from the bar does the "blockage" disappear?
Diagram here. The bleed cup hole is on top of the reservoir:
https://en.wikipedia.org/wiki/Hydraulic_brake#/media/File:Hydraulic_disc_brake_diagram.gif
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I don't think so, but I will check. I think that is the basis of the problem though, even when I manually push the lever back, the piston it's attached to doesn't fully reset.
On the attached pic, the good lever rests with the silver bar at A and moves to around B when using the brakes. On the bad lever it only ever goes back to B and moves to C when braking.
I can't physically push it back any further.
Interesting. Yeah it definitely came out the cup. After that I was initially able to feed liquid from the calliper to the lever. At the start there were loads of micro bubbles, frothy almost. Then it got better.
I bled (or tried to) as per the shimano R8070 dealers manual. Fill from the bottom, gravity bleed to remove bubbles, depress lever and open/close valve on the calliper quickly. Oil in cup and pump lever, moving bike angle and tapping everything to get bubbles out.
That wasn’t doing much so I started again and no oil would pass through the system.
I have tried loads since and it looks like I can’t even gravity fill/bleed with a cup at the top. I even left it overnight with a full cup and the hose disconnected at the calliper. Nothing left the cup. But if you pull the lever, oil comes out the hose at the bottom.