Mushy brakes 4 life...

I agree with you about the narrow pad contact area. It looks like they are rocking, contacting too far into the drum in the un machined area first.

This is not the first post about drums contacting the backing plate after installing green bearings. I wonder if it is a housing problem, if the bearing cavities in the housing ends are either machined too deep from the factory, or if that housing suffered a bearing failure at one time and the failed bearing wore the housing. With the original tapered wheel bearings adjusted to proper clearances the problem likely would not be apparent.

Perhaps pull the axles and put some spacers (1/8"??) In the housing ends before putting the axles back in? This would space the axles and therefore drums outboard enough to clear the backing plates and allow the pads to contact the drums where they are meant to.