I would agree with the brakes overheating and causing the brake fluid (water content?) to boil and allow the pedal to go full travel. The brakes overheating could be caused by poor self adjustment, corrosion in the wheel cylinder sticking the pistons or maybe not letting the handbrake off fully? If they got hot enough to melt the dust cap they must have got very hot at some point.
I have Speed Bleed NRV nipples on the brakes that make bleeding and changing the brake fluid much easier. It gets replaced every two years as most brake fluids absorb water over time. If you are checking the brake shoes remember that the friction material thickness on one is normally less than the other, even from new.
