Changed disks, hoses, calipers and pads, plus flushed brake fluid.
First I bled the brakes by letting fluid go into a bottle while topping up reservoir until fluid became clear and new.
Then I bled all the calipers by connecting a clear plastic hose to each nipple (in turn) and stuck the other end into the reservoir. Pumped the pedal until large air bubbles were gone.
Still there were very tiny microscopic bubbles visible inside the hose.

The brake pedal sits 120 millimeters above the floor.
While the motor is running the pedal can be pushed down to 75 mm. above the floor (2/3 of the way),- then the pedal gets hard.
Pedal does NOT feel spongy. When there is air in the system and you pump the pedal several times the pedal will get hard further and further up as you pump. This is NOT so in my case.

-Now, where are the microscopic bubbles coming from? Is it small amounts of air getting sucked in through the threads in the nipples as the fluid travels through the nipples? I do suspect this, since air inside the system will tend to clump together forming larger bubbles when pressure is created by the master cylinder.

Anybody here experienced the same?

Let me add that I haven't done panic braking yet since the pads are newly changed although I did press the pedal quite hard as a test earlier today and the car had no problems coming to a halt. At very low speeds (10 mph) the wheels lock. This is all I've tested since the pads and disks are new.

 

you may have sucked air back into the lines when pumping the brakes during the bleeding. see if you can find a brake bleeder hose with a one way valve or a power bleeder (which forces pressure from the reservoir - I have one that cost like $15 and uses air pressure from a tire...). I actually was able to bleed the rear calipers on my 850 by simply letting the fluid run through with no pumping. Did this problem exist before you changed calipers and hoses? Its possible you may have a sticky ABS valve or some air in the master cylinder.

 

No problems before changing brake parts.
I'm going to make a pressure tight lid and pressure bleed the system to avoid sucking air back into it.
I made sure the reservoir was topped up while bleeding.
I used pvc tubing on the nipples. Air might have been sucked in that way. Pressure bleeding will help me avoid that.

 

the other way is to have an assistant pump the brakes slowly while you open then close the nipple valve.

 

An old and trusted method, and the wife's favourite job assignment

 

+1, except last time I recruited my daughter :-)