Hello,
First off, thanks to all who replied to my posts and secondly my apologies for my delayed reply.
Justin - as it turns out the hoses are next on my list... forty continuous years of wrench now it seems I would have encountered this prior and perhaps this explains my reluctance to buy into the hole internally collapsed hose theory... that said, it may just be the solution. I also once owned a 2002 tii that was a handful to keep together but then I guess the car stuff is a whole 'nother story!
Scuba - As for the rubber hoses please see above. I realize that calipers don't have fingers... my point was that the calipers are not sticking. I believe it is common practice for people to pry back the pistons by a variety of means - c-clamps and so forth. In fact I have a tool that is designed for just such purpose - kind of backwards acting pliers if you will. The snap-on man got about fifty of my hard earned dollars years ago and as a result I can retract the piston in any caliper with professional aplomb! My point was that the piston to caliper bore interface is so smooth that my thumbs alone are enough to press the pistons home. I would have to disagree about the small pressure theory... once the lever is released ANY pressure large or small should be relieved into the m/c reservoir - unless there is an obstruction. I do hope the hoses are the culprit as it would explain it all...
McRiden - Gotta love the WAG method! I'm serious... anything but replace 1,000 dollars worth of stuff to cure an undiagnosed issue. As certain as I am that the m/c is fine I will check the bore for issues and be sure the piston returns as designed. Again, please see above for my take on the hoses... while I hate like hell to admit it, this delaminating thing kinda makes more and more sense. I dunno what the Vegas odds are but I wouldn't bet against your theory!
Rob Valdez - I'm thinking you guys are dead on with the hose issues and it's a tough admission for an old guy who actually thinks he may have almost seen it all! Nevertheless, something IS wrong and if it is not the calipers and it is not the master cylinder or rotors what's left? I assure you I understand and appreciate a job, any job, done right and would never confuse such with being anal!
Since I last posted I have completely R+R'ed the entire system and it seemed fine so I cautiously rode it about 2 or 3 miles without incident - I thought it was cured though I was unclear what fixed it. While this kind of fix doesn't inspire confidence I was content to accept it and tentatively ride the thing a bit. Tonight I decided to take it out and I could barely roll it off the lift... like an invisible demon the whole system is pressurized again... unbelievable. So... desperate to resolve this thing I came back here to see if anyone had further suggestion and the consensus seems to be the hoses. I pulled my file on this bike and the two lower hoses were replaced in December 06 - or at least the previous owners receipt says they were replaced in 12-06. I guess that leaves the uppermost little hose between the m/c and the splitter or junction or bifurcator or whatever the Germans call the block where all three hoses converge. One cannot really visually inspect the inside of this short hose as easily as the other two in that one of the fittings is a banjo type which prevents a straight through view. I'm thinking if it is a hose, it's this one.
Fortunately, I do have another LS that I can swap parts around so maybe I'll get it diagnosed and FIXED. My other bike is earlier and has ATE calipers but otherwise seems the perfect candidate for my tradeout scheme. I genuinely appreciate everyones help and will advise when I finally get this resolved...