Well, after much disassembling, assembling, disassembling etc etc I finally got to the bottom of this ...
One of the two pistons in the wheel cylinder had seized, this wasn't readily apparent on inspection as the brakes still worked via the one good cylinder but does account for the 'stickiness'.
Anyway, I clamped the hose and put a new wheel cylinder on and bled it through for what seemed an age. There's a lot more movement in the pedal now (maybe to be expected?) but I'm not convinced I've got all the air out.
Are there any 'tricks' to bleeding on the 126 or is it just perseverance and copious amount of new fluid?