I understand that this situation was diagnosed, but I thought that I'd relay one of my own experiences...
When I fitted aftermarket pads and slotted rotors I still wound up with a shitful pedal feel and travel. With time the pedal came good, but not after some soul searching. What had I arsed up?
I followed the rotor bedding instructions from the retailer and manufacturer prior to installing the pads. So that was cool and the pedal feel didn't change.
About 500km later I fitted the pads and went out to bed them as per the manufacturers detailed instructions. I was surprised in that traffic conditions meant I could follow them to the letter. But at the end of the bedding it just felt like there was air in the lines.
So I went through and bled all four lines. No change. Contacted the retailer for advice, hmmm. Lot's of head scratching but no solutions presented from his experience.
After another couple of hundred clicks and things started to come good. The only thing that I can put it down to is that everything had to bed into each other and I might not have left enough time between fitting rotors and pads.
So it is possible that things can temporarily feel shithouse without there being air/water in the lines.