'64 Barracuda Master Cylinder.

I had a 1-yr old MC in my 65 Newport (original single-pot type) fail. The pedal sunk to the floor, but it didn't leak at the rear. I pulled the piston out and found the piston seal was cut. Everything was pristine inside, but the rebuilders had re-bored the cylinder, but didn't break the sharp edges at the ports. Different than your issue, but it does show poor quality control. I have a dual reservoir MC on there now (95-99 Breeze, w/ 2-4 adapter plate).

I used silicone fluid in all my non-ABS cars, so no concern w/ paint removal. When I bleed the brakes on my glycol cars, I save the fluid and use paint remover when restoring valve covers (soak rags, leave on top for a week in a plastic bag).