Petal going down 1/3 and hard but not stopping unless you stand on it is a problem with friction of the brake shoes. They are probably oily. That's kind of a big job to get at brake shoes being that you have to remove the whole axle end assemblies. Fluid shooting up with the cap off the master cylinder is normal. Empty inching cylinder means that it leaks or the inch valve slave is leaking. Bubbles coming up after filling is just it's trying to bleed itself. I think you need to get at the brake shoes to solve the problem.