My memory is that someone on this list a while back posted that the 27x1 1/4-in tire size was a Dunlop creation, done to create a new standard size, and probably pushed by the Raleigh empire. It's just enough bigger than the 700C that was used on the Continent to require purchasing a separate tire and rim (remember, Dunlop made both). From there, it was a quick hop, skip and a jump to its becoming the standard lightweight clincher tire of the English-speaking world.
I suspect that what killed the 27-in wheel was the move to short-reach brakes and criterium or Italian influenced bikes. Suddenly there wasn't as much room to switch between tubulars and clinchers. You could do the swap all day long with Raleighs and Peugeots, but I suspect you couldn't even fit a 27-in wheel and tire into a Masi or a Colnago with the tire dead flat ...
Russ Fitzgerald
Greenwood, SC
http://internaldetours.blogspot.com