the switches do double duty, turning on the rear brake lights when you step
on the pedal and turning on the dash light if "significantly different"
pressures are detected in the two circuits, so it's not a complete surprise
to me that you need themboth hooked up for the rear lights to work.

My FLAPS (a CARQUEST dist.) sold me a master cylinder for my 83 Vanagon
(diesel but almost certain they all use the same mc) for a little
under $50.  My 83 only has 80K on it, but its time that kills the seals 
in these things usually.  I would certainly replace the mc on any car
of this vintage if I was already committed to bleeding the system out. I
guess th way i see it is if you save two hours of labour later by replacing
the mc now then that saves more than the part cost! This completely neglects
the fact that when an mc does go to the expereince can range from the
annoying  (damn things broken again..) to the hair-raising (gee i hope
those kids in the crosswalk see me coming ) - a little morbid but
no brakes can be morbid indeed.

when i did my mc i removed all the instrument electronics (a couple of
phillips screws  and electrical disconnects - i didnt mark them 'cause
they only go back in one place but your technique may differ).

Loosen switches and unions before unbolting the beast (2 13mm bolts),
likewise get the unions started before you tighten the mounting bolts.
The switches are pipe threads so dont torque the hell out of them - just 
snug them down.

Incidentally,since you have to bleed this thing i would replace every
bleeder screw unless they look relatively new. Lately (mainly because
my FLAPS abovehas a neat display case i like to play with) I have
been into replacing bleeder screw >2 years old in an effort to
eliminate the snapped bleeder screw syndrome from my life ....

incidentally (forgot to post this earlier) the clutch circuit does pull
fluid from the reservoir but it is designed so that the brake system
has first dibs on fluid (being able to stop is more impt than being able to
go :-)

i remeber i had a lot of trouble getting the clutch hose of the fluid
reservoir - ended up cutting it and shortening it a cm or two.

sps