It sounds like you're describing excessive travel on the rear wheel cylinders, due to improperly adjusted shoes.  Does the handbrake work properly?  It should only pull up  3 to 4 clicks before it stops and the rear wheels lock.  This is an indication of the travel of the rear shoes; i.e.: the gap between the shoes and drums.  This needs to be adjusted to take up all of the clearance without causing excessive drag.  The shoes need to be centered by application of the brakes between adjustments, until it's adjusted perfectly.  You'll be amazed at how much this affects your total braking action.

Mike B.
  ----- Original Message ----- 
  From: Edward Maglott 
  To: vanagon@GERRY.VANAGON.COM 
  Sent: Sunday, March 22, 2009 5:39 PM
  Subject: another brake saga

  I was having wonderful brakes after replacing my master cylinder a
  year or so ago.  Apparently I had been driving around with little or
  no pressure to my rear brakes for a while.  All was well in the brake
  department until I started losing fluid.  Then I started losing fluid
  fast, and had very poor stopping power and a puddle at my right rear wheel.

  Rear wheel cylinder failure, drained all the fluid out of that
  circuit and I know I pumped air into it.  I also think the pedal hit
  bottom during this episode.  Off to FLAPS for 2 new wheel cylinders
  and new shoes.  Debated waiting and getting cylinders from BD or
  another list vendor, but was in a hurry to work on it while I had
  good weather.  OMG what a mess on the side that had been
  leaking.  yuck.  Got everything cleaned up and put back properly and
  adjusted properly so the shoes were barely touching the drum.  Bled
  the system with the old fashioned GF pumping the pedal method.

  Pedal remains soft.  Meanwhile I score a cool pressure bleeder on
  Freecycle.  So give that a try, didn't get any more air out.  (Maybe
  a tiny bubble or 2.)  I bled out about 12oz total which I think
  should be enough.  No change in pedal.  I review archives and read
  about bench bleeding the MC, which I did when I got the new one.  I
  do this with it in the van.  Just cracking the lines and trying to
  catch the fluid with rags.  No change.  I go for a drive on some
  gravel roads and find I can't lock the rear wheel with the
  brakes.  Fronts do lock.  On pavement I can't lock any wheel despite
  what feels like a LOT of pedal pressure.  Can't really tell if I'm
  hitting bottom in that situation.

  I decided to pull the rear drums to see what is going on in
  there.  Weird thing.  On One of the new cylinders the piston toward
  the front of the van pulls back into the cylinder on it's own.  I
  think it might be the rubber boot pulling it back.  It goes slowly
  but ends up with a pretty big gap between it and the shoe.  Up to
  about 10mm if you wiggle things and wait a couple minutes.  I looked
  at the cylinder on the other side and it seemed to be fine.

  Questions:  I'm thinking that on the first press of the brake pedal
  the rear circuit is going to spend all that fluid to push that piston
  out to the point where it touches the shoe and the rear brakes aren't
  going to do anything.  Yes?  How much fluid do I need to drain from
  the right rear wheel before I am sure I have bled the whole circuit
  from the MC to the wheel.  How much for the front?  Bentley mentions
  pushing a lever on the brake pressure regulator, but there is none on
  my '86.  I remember other VWs having the kind with the lever, is this
  just an error?

  Any other ideas appreciated and thanks in advance.

  Edward