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@Dammit
I just had a thought - when I was putting the bike back together the swingarm grommet vanished on the floor somewhere, so I replaced it with a different one (from an Intense) which I've used before and was fine - bit tight, but fine.
I recall it being really tough to get in this time round - but didn't really think much of it. However - could the grommet be constricting the hose to the degree that it makes fluid return difficult? That might explain the pistons sticking out too far. Not the wooly lever feel maybe, although I'm not sure there. I'd think that has to be air in the system.