Yep, your problem sounded exactly like what we had going on. After gutting the residual valve the problem went away. We did the same test you did, and found there was still pressure at the wheel when the brake was not being applied. To be honest, I'm not sure most applications even need one. I know they are supposed to be used where the master cylinder is lower than the wheel cylinders to keep the fluid from draining back, but ours are working fine now without one.

Don