I've owned some HY/RDs for about a year now and it took me a long time to get my head around them.
First off, check out the technical bulletin here:
http://www.trpbrakes.com/category.php?productid=1198&catid=206&subcat=0
Basically, if you can't engage the black screw to lock the brakes then they will start to perform worse and worse. This is something that is very easy to make a mistake on as when the lever throw feels bad you'll naturally want to tighten the cable. Too tight and you run into the kind of issues you're seeing though.
Aside from that the pads that come with the HY/RDs do wear fairly quickly. Probably worth double-checking that they're not too worn.
Finally, compressionless cable outers will improve your experience/reduce your lever throw. Worth moving to if you have the time/energy/money.
Actually, the real final point is that the lever throw on the HY/RDs when properly set up will always be quite long. It's just an unfortunate part of the product design. It would be even worse if you had old Tiagra gearing.
edit: Once you adjust your cable length if you squeeze the levers a few times the brakes should start to readjust btw.