Originally Posted by Devh

I think I should have explained it a little better. If you have good fluid in the system then you don't need to bleed the brakes when you change the pads. However if the brake fluid has taken in water as it will do over time, it has now reduced its wet boiling point. Overtime the water will boil and form a gas which will lead to a soft pedal. If the person who has bad brake fluid has not experienced a problem and they go to change pads then the fluid will shift and reduce the boiling point further and unmask the condition. I imagine it's probably from moisture and dirt in the system.
I have experienced this twice on friends cars where the brake fluid was improperly maintained. Once the cars were flushed the pedal was hard again and not compressible. The fluid that initially came out was thin, black and foamy before it turned to what looked like normal brake fluid.

Originally Posted by Doublebase

Interesting. I wonder if the pushing back of the caliper piston causes some air to get past the square cut ring as well? Leading to some of the problems.

I do notice that the fluid that is trapped in the caliper is by far the worst in the entire system, I imagine that is because it is near the seal and gets very hot from the pads...that's where the nasty stuff lives. Too bad there wasn't a way to kind of have brake fluid circulate through the system like every other fluid on a car, because right at the caliper you end up with the most worn out fluid and that's where you need it most. Meanwhile up at the master cylinder that stuff is usually shiny and new (although the entire boiling point of the fluid drops with moisture evenly dispersed through the fluid).