I suspect that either this new master cylinder is faulty and fluid is escaping past the internal seals when vacuum boost assisted, or perhaps the ABS unit has now also got issues.
If the travel of the pedal is longer than it was in previous cases then IMO only the master cylinder can be the problem or there is air left in the system somewhere...i can't see any logic in how the modulator can cause that without any leak. I've seen the same bleeding procedure you quoted in a Wabco document and IMO it's not the best way, the sequence described in RAVE has more logic for me. A good move would be to find a place to activate the HDC and let it work a bit then see if something changed or not.
Discovery Td5 (2000), manual, tuned
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