OK, so I've tried pushing the pistons flush with a clamp and even with the bleed nipple open, they're not budging. I think that's as far as they go.

Here's a pic. https://lh3.googleusercontent.com/-U...o/IMAG0329.jpg

Strangely, my pistons seems to have inserts which make them sit even further out. Is that normal?

So I'm stuck. With the pistons retracted as much as is physically possible, with the pads installed, it's not easy sliding the caliper over the disc. The pads are already rubbing signficantly. Rotation isn't free even with the caliper just pushed on and held - there's physical contact. Once the caliper bolts are tightened up and the lever pumped, that's it. Proper binding.

I'm getting stuck here. It's like there's not really enough space around the pads even with the pistons fully retracted for them to completely clear the disc.