I don't think the free play is needed to accommodate expansion as any increase in fluid volume due to heat would flow back into the reservoir via the compensating or bleed port, rather than pushing the piston out. The bleed port is small and easily blocked by debris or corrosion if you don't change your fluid regularly. If is does become blocked that can cause brake binding or, in extreme cases, lock up as the fluid expands and has nowhere to go.
Sorry, couldn't find a diagram of a clutch master so you'll have to make do with a rear brake - but the principle's the same.
As long as you have some free play, so you know the clutch is disengaged when the lever is fully out, you should be fine.