Bleeding Master Cylinder
The master cylinder will bleed along with the rest of the brakes. Bench bleeding the master separately is only recommended so that you know the master is completely bled before you bleed the rest of the system. Otherwise you'd just be guessing about whether you had all the air out of it. For what it's worth, after the extensive amount of bleeding of the entire system that you've done, I think that it's pretty safe to say that you've got all the air out of the master cylinder by now. You've pretty much confirmed that when you mentioned that the pedal was rock solid when you removed and plugged that loop in the line. Additionally, if the brakes only work with that loop present, then that indicates that fluid actively flows through it and it has probably been bled well also.
With these big trucks, it's tough to get the pedal to feel as good in a short travel like it does with a smaller vehicle. Without power brakes, the master cylinder bore tends to be a little on the small side to generate enough line pressure to haul that big truck down with a load on it. Smaller master cylinder bores generate more line pressure than larger ones but require a longer stroke to move the same volume. You've got a lot of volume to fill in those large tandem rear wheel cylinders as the pistons start to move. When you couple those two facts together, the result is that it takes a longer pedal stroke than you're probably used to to make that happen. The only cure is to install a large bore master cylinder that can move a bunch of fluid in a really short stroke in tandem with a healthy power booster. Then you'll have both the volume AND the pressure to make it stop with a minimun of pedal travel.
I guess my long-winded point is that you probably shouldn't drive yourself too nuts trying to get the brakes to feel and work like they do on your Mustang because it's probably not going to happen no matter what you do. Especially considering that you intend to replace every inch of the braking system with different parts in the later stages of your build, I'd just get her to where she stops reasonably during the first stroke of the pedal and call it good. I've got a '57 Chevy 6400 truck that is very similar is size and brake system design to your truck other than it has a HydroVac booster on it. After completely rebuilding the entire hydraulic system, bleeding it extensively, and carefully adjusting the shoes, the pedal will still travel 1 1/2" - 2" on the first stroke and will be higher on the second stroke if I hit it again quickly. It's just the nature of the beast. What's important is that it will lock 'em up and stick my nose to the windshield on that first stroke.
The pedal doesn't have too long of a stroke to it, it was just the "works better the second pump" thing that was bothering me. I'll have to bleed everything again (as playing with that piece added air :\ ) And see how it works. I've re-adjusted the brakes since then, I just want to be real sure I can stop that thing in a heart beat because if I can't, I will completely destroy who ever I hit, even though this is big truck country, lol.

Seems logical to me, then again yesterday so did pluggin it, lol.
It just seems odd that there would be a pointless line that feed back into it, and furthermore the whole "how would the booster work?" theory to it.
Just spilt-balling, but it seems right... crap now to re-bleed it all, lol. Least I don't have to jack the truck up. Maybe I'll get lucky.
There's a tremendous amount of difference in "pre bleeing" a master cylinder on a bench, and bleeding your brake system
Pump, hold down on petal, open bleeder, close bleeder, release petal / pump again, repeat
And in my honest opinion, if you don't know how to properly bleed a brake system, you shouldn't try. You should take it to a brake shop and have it power bleed rather than learning by making a [big] mistake doing it yourself, and possibly not doing it right.
I think you may well be on to something with your drawing. On my Chevy, there is one line coming out of the master cylinder that goes to the booster and then one line coming out of the booster that goes to a 3-way splitter. Why Ford may have chosen to have it all come together at the master cylinder like that is anybodies guess. On another note, you've mentioned that your truck at one time had air brakes. I have doubts that it ever had full 18-wheeler style air brakes, but Ford did at one time offer a compressed air power booster for the juice brake system. I bet that's what your truck had plumbed in to that loop.
The engine mounted compressor for the brakes was gone when I had it, and it had been put back to fluid I think. The liquid inside wasn't even all that dirty when I bled them.
Not sure how they had it all set up to be honest, but there is a whole thing of air parks I took off that where no longer being used.











