Water, in no matter how much quantity, is not going to cause your brake seals to swell. You can soak them in water all day from now until kingdom come, and the seals will be fine. Water, or water contaminated brake fluid, will cause your brake metal parts to corrode. Down long hills, the water in the fluid may boil and cause a complete brake system failure.
Seals swell when they are exposed to the wrong fluid, period. If the seals were new, then, somehow, they were exposed to an oil product of some sort. I have seen people put a lot of different things in their brake reservoirs: engine oil, transmission oil, automatic transmission oil, WD40, 3n1 oil, etc. All with unfortunate results.
What happened here? And, who's responsible? Hard to say. Could have been the rebuilder, your mechanic, or even yourself -- you did have a look at it after all, maybe polished it with something? Not accusing anyone, least of all yourself. Just pointing out, it's easily done.