You may have made the most important observation, the swollen hose.
If the hydraulic system uses brake fluid, the rubber parts are not compatible with petroleum products such as engine oil, transmission fluid, and power steering fluid. Those products will cause rubber parts to swell and become mushy. When that happens in the master cylinder, the lip seal grows an expands past the return port to the reservoir. If this happens in the brake system, the trapped fluid will keep the brake applied. As the fluid heats up and expands, it applies the brakes harder.
Heat buildup in the clutch system isn't a problem, but if the lip seal grows and blocks the return port, gravity won't be strong enough to draw fluid down. For now, you will have to pedal bleed with a helper, but longer term, it is likely you will have to replace all rubber parts in the system including seals and hoses. If any rubber part is not replaced, the contamination will leach out into the new fluid, and spread to the new parts.
Saturday, March 13th, 2010 AT 7:37 PM