The inching pedal dumps pressure in the transmission- effectively putting the trans in nuetral so that you can raise the engine speed to use the hydraulics without fighting the trans.

If you're losing brake fluid in the inching master cylinder with no visible leaks, the fluid is going into the trans through the actual inching spool itself. The brake line on the inching side should go from the master cylinder, to a cylinder with multiple brake lines going to it on the front of the differential behind the upright. One of those brake lines should go to the left side of the trans (as sitting on the machine) to a little cylinder looking thing with a bleeder on the top. This is the inching spool- remove the brake line, the spool should unthread from the trans- replace the spool itself- Clark #2798420. Don't worry about the brake fluid in the trans- it's a very small amount compared to the fluid volume of the trans