Shimano RS785 hydraulic disc brake caliper will not reset
Thank for your detailed description and analysis of the problem.

I had similar symptoms with RS785 levers and RS805 callipers. I tried everything. Extreme force on syringe would only get a little oil into the shifter bleed funnel. Oil would not flow freely from the shifter funnel to the calliper with the bleed nipple open. Operating the lever would force oil down but not freely. Calliper pistons were slow to return, so the first pull on lever felt sort of OK, pulling immediately again and it felt hard.

I was not aware of the seal on the J-Kit (Easy Connect) system until I saw this photo which got me searching and I came across your post here.

You are correct. I disconnect the joint and a minute flap of white sealing material was causing the problem. I removed it using a needle and  re-bled the brake. Here is a picture of the removed flap with needle on a 5mm grid.



I did not have to replace the brake hose. The rear brake is working perfectly and feels the same as the front brake.

As to what caused it. I can only speculate. I wanted the brakes on my new bike swapped with Left = Front, Right = Rear (same as US, in NZ they are opposite). LBS swapped by changing over the Easy Connects. Assuming the brakes were operating correctly prior possibly this was partly to blame. In addition they introduced air and did not re-bleed the brakes so maybe that also aided the material flap in moving. 

Another thought is that the seal was thicker due to manufacturing or material defect and did not burst but stayed intact.