First, let me say that you are asking us to second guess a service facility without even seeing or driving your car. That sometimes can be difficult.
Second, keep in mind that there is a difference between having a soft pedal and very high pedal effort for given level of braking. Sometimes the two can be confused. A soft pedal often comes from air in the system, a faulty master cylinder, faulty brake hoses and there are other, less common possibilities. High pedal effort can be: faulty or wrong brake pads, faulty brake rotors, a faulty power assist booster or a vacuum leak in the power assist system
If I road tested a car with a soft brake pedal, first thing I'd do is look at the fluid. If it was really ugly-looking, I'd flush the system and do a full bleed. If the fluid was not bad I'd do a full bleed.
If the soft pedal persisted, then I'd look at all the brake hoses and replace as necessary. If it was still soft, I'd consider the brake master.
If the problem was high pedal effort, I'd look at the pads and rotors first. If the pads were faulty, obviously I'd replace them. If the rotors have pad material glazed on them, first, I'd measure them. If they are significantly above discard thickness, I'd try machining them but only if the glaze or pad material can be removed by taking off a few thousandths. I say that because every time you cut rotors you're removing material and decreasing the rotor heat-sinking ability. If the rotors are pretty badly glazed or have cementite deposits on them, I'd replace them.
Lastly on rotors, the brake service business makes a s**t-load of money selling people on turning rotors. I prefer to follow the GM Service Manual and never machine rotors unless they have groves deeper than .060-in or are truly warped and are above discard thickness once they machining is done.
Whomever told you the 95-96 C4 brakes require special equipment to bleed didn't give you the whole story. The base brake system on all C4s, regardless of model year, can be manually bled or pressure bled using common tools any service facility and even some DIYs would have. What's different about the 95-96 brake system is that it has ABS 5 instead of ABS 2 or ABS 2S. In the case of a soft pedal after bleeding the base brake system, the service facility needs to run the "auto bleed" procedure on the ABS 5 brake modulator. To do that requires either a TECH 1, Mastertech or TECH 2 scan tester with the appropriate software.
Again, we're trying to diagnose a brake problem w/o actually seeing or testing the car, but as I see it you have two choices:
1) Go back to the dealer and tell them you want them to run the ABS autobleed procedure. If they say they did it, then, I'd go looking for a brake specialist shop. If they say they don't have the proper equipment, I'd ask to see the Fixed Ops or Service Manager and explain to him/her that, if they never did Autobleed, then the job wasn't done right. Try and negociate some kind of settlement then, locate a shop or other dealer which has the right equipment to run Autobleed on an ABS 5 system and take the car there.
2) Find a shop or dealer with the right equipment for Autobleed and have them bleed the system.
Based on your description of the problem and what's been done so far, my best guess is they either did not or could not do Autobleed. That might be because they do not have a tester which will do that on a 95 or they may not have known about the procedure. If you do get someone to "rebleed" the system including Autobleed and the pedal firms-up, well...you have your answer.
