Dan, I switched my brakes and clutch to silicone (DOT 5) 30 years ago and have had great success. There are debates about the qualities of the various fluids, but I think 99% of the issues are regarding use in the brakes, not clutches. I would be 99% certain that the fluid you are using is NOT even part of the cause of your clutch issue. As I said before, 1" travel when unloaded vs 1/4" travel under load suggests air in the system. Something is compressing but the fluid does not. Must be air. Gotta do a better job of bleeding the system. Other possibility is that fluid is leaking past the seal either in the Master or the slave.
Tom
Tom