OK, in the interest of good documentation for those with similar problems in the future...here's what happened.
I tried boiling the caliper to loosen the piston to no avail. Evenutally I gave up trying to get it out and decided that I would push it out via the brake system itself (I have no grease gun at the moment). Replacing the master cylinder was a bit of a challenge. I followed some advice I found on this site and purchased a set of plyers from Sears (tool # 47385). They didn't fit perfectly, but with a little grinding, i was able to fit them into the the tiny area needed to remove that pesky circlip. By the way, I found that the ring clip that is supposed to hold the boot was lodged above the circlip. Once that was removed, i have an easier time getting to the circlip.
My master cylinder was a wreck. Worn. Even sandy in places. Glad i decided to replace it (30 bucks at the old bike barn).
Hooked everything up, bled the brakes and the piston came right out. Wow, i thought the master cylinder was bad...the piston and the back of the caliper literally had sandy/muddy chunks all over them. I cleaned everything out (I will evenually get a stainless steal piston) and reinstalled it. Finally, I applied to grease to the edges of the brake pad and the inside of the caliper.
Re-bled the brakes and wa-la...i have brakes again!
![Grin ;D](http://forums.sohc4.net/Smileys/default/grin.gif)
Thanks for everyone's help!