I'm just guessing on your particular brakes, but the cam may adjust the pad contact point. These typically work by changing the volume of the master cylinder. It may be normal to have it nice and firm on 1 and squishy feeling on 4. That cam is to adjust the modulation at the lever for that purpose. Some people like their brakes real firm and others a bit squishy. Like I said I don't know how your brake work, but I work on mountain bikes for a living. The higher end mountain bike brakes have this feature. What position was the cam on when you bled the brakes? I've found on mt. bikes if you bleed them on the squishy setting, they get nice and firm when you flip it back to the firm setting. This is because you get the system full of fluid to max capacity on the squishy setting. When you switch to firm it pumps extra fluid to the calipers to move the pistons closer so that at the lever you have a shorter throw and firm contact.