IMPORTANT:- I assume that when bleeding the brakes, you had the rear wheels supported so that they were in their normal position relative to the body. If the car is raised and the rear wheels are left hanging, the rear brake load compensating valve closes preventing proper bleeding of the rear brakes, i.e. you'll never get all the air out. In garages they used to bleed the brakes with the car over a pit or up on a 4 post hoist, at home you can either remove the rear wheels and lower onto blocks (don't bend the brake rear plates!) or try supporting the outer ends of the leaf spring on axle stands (be careful!, use additional stands/wood blocks under the bodyshell in case one of the axle stands slips).
Assuming you've got all the air out of the brake system, try applying the handbrake and see if the pedal travel is reduced. Should this be the case, try reversing and applying the brakes sharply a few times - sometimes this is necessary to get the brake shoes to adjust correctly.
If no improvement, you could try clamping-off the 4 brake hoses - this isolates any lost movement at all 4 brake units - pedal should then be high and firm.
Any sponginess (sp.?) means there is still air trapped in the system. If the pedal is firm and high, the master cylinder and it's seals are fine, if not you still have a problem with the master cylinder or air in the master cylinder.
If you don't have 4 brake hose clamps, you could use visegrips or pliers with suitable packing to protect the hoses, as the bore of the flexible brake hoses is only c. 3mm, there's no need to squash the hoses hard.
If the pedal is high and firm with the hoses clamped, try removing one clamp at a time to locate which brake/s are causing the excess pedal travel.
It's most likely that the problem is with the rear brakes, the so-called automatic adjusters don't always work correctly (try applying the brakes sharply while travelling in reverse, as described above).
2nd problem is that the brake shoe return springs (particularly modern replacement ones) are too strong/short and overcome the friction of the auto-adjusters and pull the shoes back, resulting in excess pedal travel.
People here on FF, either refit the old springs or stretch the new springs by about 5-6mm.
3rd problem is the auto-adjusters fitted to replacement brake shoes often don't grip as well as the original type. To check out problem 2 + 3 above, you could remove one rear brake drum at a time and have someone gently press the brake pedal but only a small amount - you don't want to pop the pistons out of the wheel cylinder - while watching the brake shoes - they should adjust out but return only slightly when the pedal is released - you'll probably have to lever the shoes back a little to refit the brake drum. Then try the other rear brake.
4th problem is that some replacement brake shoes have thinner linings but these should still adjust up if the brakes are applied while travelling in reverse. Unless the brake drums are badly worn or have been skimmed??
5th problem with brake shoes is that iirc there were 2 different 'web'? lengths used on different Fiat models. (by 'web', I mean the part of the brake shoe at the top that engages with the wheel cylinder). I vaguely remember this difference was between either the 600 and 127 or 850 and 127 brake shoes. But worth considering if all else fails to find the problem. Sometimes aftermarket parts are incorrectly marketed as fitting all models....
The reason I mention all the above is that incorrect replacement parts may have been fitted. E.g. are you sure the wheel cylinders you fitted were for a 127, did you compare them with the originals?
The only problem I've seen with the front brakes that can cause long pedal travel is if the front wheel bearings need adjustment causing the brake pads to be kicked-back on turns. This doesn't apply to the 127 as one-piece, non-adjustable bearings are fitted. Just check that you don't have a very badly worn front hub bearing. Also check that the caliper sliders are clean/lubed - although I do note you have overhauled the disc units, so assume this was done.
If the pedal travel is such that the brake pedal is almost hitting the floor, this is what used to happen if one of the brake circuits (i.e. either the front or rear) wasn't working (e.g. major leak or lots of air present). If the car is jacked up, trying applying the brakes and see if all 4 wheels are being braked or maybe just 2 wheels braked and 2 just slightly dragging - this indicates a problem in one of the circuits.
P.S. I had a 1976 Fiat 127 903cc on which I did much work and was employed as a Fiat Main Dealer Mechanic in the 1970's.....
Hope this of some help,
AL.
