If you had damaged the seals you would be leaking hydraulic fluid somewhere. Make sure everything is clean and dry. You have re-blead the brakes and there was no air in the system. So you probably don't have air in the system. Something else is wrong. Even if you did have a little air still in there, I don't think it would change the distance of travel on the handle. It would just make the brake feel spongy. You said earlier in the thread that you changed the brake calipers and the hoses. Are the brake calipers identical to the old ones? Are the braided hoses the same diameter as the old ones? It sounds to me like you have less hydraulic pressure than you had before, but you don't have a leak or the pressure wouldn't hold and you said the handle isn't going right down to the handle bar.