OK, so, obviously I could replace the cable/housing (PIA..). But another question - the silver screw on the side of the caliper that seems to fine adjust the width, I have that unscrewed pretty much all the way to make room for my HED Jets. Is having that unscrewed also contributing to the calipers not having a strong return? Am I better off having that screwed in more, and instead shaving down the brake pads to make more room?
Any other tips to maintaining the Gen2 rear brake? Again, my first gen was problem free... :(
How is the front end looking? Reason I am asking is mine had issues in the actual cable housing junction between where the cable housing enters the frame and the front end. Basically, when you take off the plastic cover over the fork/steerer tube, unless you routed the bike in 1 shot (which I assume you didnt) you likely have a connection point where the housing enters the frame and you have a female-female connector. I found that due to it's location, it was prone to sweat getting in there and as a result, the cable itself started to rust (also dosn't help that there is a junction there so any coating will be stripped off eventually). You may have to replace the brake cable itself. Consider taking the front end apart and seeing if the cable has degraded, because this will make the brake cable stick. You may also want to check the brake wedge on the caliper itself and see if there is enough tension provided by the calipers to pull the cable back in; I found that the wire would sometimes snag and bending the wire to reduce opposing tension (ie. fighting the caliper) helped slightly to open the brakes more.
Not a Trek employee but I ran into the same issue with the screw as well, where I had it basically fully undone. No, mechanically it would not affect the spring action and resetting of the brake pads, but you can try to screw it in and maybe there is something getting caught or impeding the brakes? Unfortunately this is just a downside to the integrated brake design and one of the main reasons why I upgraded from my SC. But mechanically, the brakes should be fine. My guess is its the cable or something in the brakes itself. You could also consider pushing the brake wedge slightly higher than you normally would so it is constantly "under tension" by the calipers, which would help improve the release and reduce sticking, but I would think this would be more of a band-aid solution and if it is the brakes/cable itself, you would likely see the problem persist.
FWIW I would be meticulous on how I set my brakes up when I had the bike as it drove me crazy. Cleaned 1/2 times per year (deep clean), remove and re-grease entire brake assembly, I moved to Titanium screws on mine because of moisture getting locked in there, moving the wedge to be always under tension, bent the wire to allow for easier routing, etc.
Hope you figure it out!
Edit: I should note that I personally suspect its the front end junction. I ran it in Low Far setting and the whole front end area was TIGHT. Basically, you could barely fit the brake cable in the space and I had to literally break the stupid plastic cover to make it work. I think they might have improved the cover (or so I hear) so you may need to order a new one if its the old one, but this likely opened or exposed the brake cable to more wear and moisture and accelerated wear there. You might not have this issue if you run a different configuration. Also note that you may have more issues if you are running this in mech, as the area is so tight in that front end. Fast bike but has its downsides too