Of the top of my head:
Progressiveness is mostly a function of how close the stationary pad is to the disc, the smaller the gap the sharper the braking. IME if you've adjusted to the point where there's no audible rubbing at all, the gap's probably a bit too big. If it's not slowing the wheel down appreciably, let it make rubbing noises, at least until it's bedded in.
Best way to ensure the caliper is properly aligned with the disc is to slacken off the mounting bolts, dial in the pad adjusters until they clamp the disc tight (there's a asymmetric disc position in the slot given in the instructions that you should aim to reproduce), tighten the mounting bolts and re-set the pads.
They do bed in a bit. Take it for a ride, making sure to do plenty of hard braking, and then re-adjust.
Cable 'stretch' happens in the usual way, though that's independent from pad adjustment on a BB7.
If it's none of that, I'd start suspecting contamination...