I'd agree its not the rear pressure regulator valve, unless you just see brake fluid squirting out of it someplace. I just had one rebuilt by PMB performance in Utah for ~$200. $400 is too high. They list it as a Porsche 914 rebuild, but they said its the same rear ATE valve our cars use, although I couldn't verify that. They did a good job, clean and repainted, all new seals, and adjusted.
Most likely one of your new brake parts is defective. Master is the logical culprit, but it would be worth doing a vacuum leak down test on the booster while you are waiting for other parts. Mine will hold the vacuum for up to 1/2 hour after turning the engine off. Just pull the line off and listen. If it doesn't hold vacuum, its either a bad check valve (cheap), or a leak in the booster diaphragm (not so cheap). I could also be that someone didn't use an actual vacuum rated hose to the booster. Any old rubber hose IS NOT SAFE because they can collapse when it gets warm under the hood and vacuum is high. A properly tuned engine at hot idle can suck 25PSI+. If <20, you have other problems.
I had tried rebuilding the rear valve myself but couldn't find the correct O-rings (material) and also I had no way to test and reset the spring pressure so it continued to allow rear lock up way too early. Lock up was a bit scary and not a welcome noise around the neighborhood, or anywhere. Makes you thankful for anti-locks on new cars. All this valve does is to soften the rear pressure momentarily in a panic stop situation, or god forbid, you stomp on the brakes in a turn....don't do that. Eventually I think the pressure gets there though if you keep on the peddle long enough...multiple 100's of mSec's?...I don't know, you just have to experience it.
A safety test for all of us is to get out in an empty parking lot or remote road someplace with plenty of room to lose it safely, and just stomp on the brakes at <35MPH to see what happens (with the wheel straight!). If you are happy, then great. And then, dont do it!, but just imagine what fun that would be while in a 90MPH turn...In my case, it scared the crap out of me and I rebuilt or replaced absolutely everything associated with brakes. I also think a whole lot differently in the pagoda when I'm on those nice high curving freeway interchanges that allow high speeds and I see brake lights ahead. It's easy to get complacent when our cars are so fun to drive fast, but you have to leave a lot of extra space for safe braking.
These cars are great, but the tech is old, and wont save you from yourself the way new cars will. Everyone needs to get at least a little *safe* experience with non-ABS assisted panic stops. I got my spin experience off-road in a '69 chevy truck with a 396 and drum brakes, but not everyone is old enough to have had that kind of "learning opportunity" ;-)
Wiki says, of course, Mercedes had the very first all wheel bosch ABS on the W116 in 1978, with ABS standard on most all cars by 1987. If you learned to drive after that...I'm sorry you missed the fun.
