luke,
If I understand you correctly, the slave pushrod will move 1 to 1 and 1/2 inches when you actuate it with the master cylinder. Can I assume you made this determination with the slave cylinder outside the bellhousing? This system is hydrostatic, therefore seeking its own rest point. When all is right, as soon as the clutch diaphragm has come to rest with the pedal released, the slave cylinder pushrod and piston stop, and are ready for the next cycle, with no discernable play, or "slop". This being the case, and you should make sure it is, and there being NO air in the system, you would seem to have a mechanical problem in the bell housing. This could take the form of a broken clutch release lever or even a broken clutch bearing or diaphragm.
Before pulling the transmission, make darn sure you really are getting the hydraulic/mechanical motion you need. Also, try pushing the pushrod into the housing to see if it would be at the proper depth in the slave cylinder when at rest (toward the closed end of the cylinder). I know all this is a royal pain with this transmission in this car, but I see no other choice if you are sure of your statements. Good luck.
Motorbill
From Lola to Land Rover, If it's British and has wheels, it's likely I've bloodied me knuckles thereupon