Thank you all for the good advice. Here's the outcome. It would have made a funny video.

Wednesday afternoon and evening until about 9:30 and all this morning, son and I struggled to make our home-made pressure bleeder work. The details are too long and gory for this post, but we had problems with air leaks, fluid leaks at the MC reservoir cap, and lastly the Lexan bottle sprung a leak, spraying pressurized brake fluid everywhere. We cleaned that up and rinsed the car off well and looked for a shop to do the job for us.

We got expert advice from Rick at Made in Sweden in Seekonk, MA (whom I recommend highly). He started by saying that 240s are some of the hardest cars ever to get a decent pedal on, and it could take a few hours of expensive shop time. He correctly diagnosed that we needed a new MC, so after an hour of calling around the Yellow Pages we found one.

Once the new MC was installed and bench-bled, we re-bled the system on all wheels using the pedal-pump method. Being a home job, that involved jacking up the car at each corner as we did each wheel, which made it seem to take forever. But we finally got an ok pedal feel once the last of the 8 bleeder screws was running clear.

If I had just bought a MC at the start and did the bleeding traditionally, this job would have taken about 2 hours instead of 1.5 days.

This is son's first car, which he got for free from a friend. He just got his license a week ago. So far we don't have much $$ in it, but we sure have a lot of time invested already. He missed two days of school, but got more education working out this brake problem than he would have gotten in school so it's ok by me.