One day I was riding down a steep hill, dragging both brakes (BB7 with 160mm rotors), I heard a click coming from the rear wheel and felt the right brake lever jerk. The brakes continued to work, so I did not pay much attention to this. Two days later, during braking slightly, I felt the same thing with the front brake (a click and a jerk in the brake lever), but this time the failure was more severe - the front brake stopped working and the pads were rubbing on the rotor in the front.

When I took the pads out I noticed that both springs had one of the four "legs" chewed off - I suspect that the "leg" got sucked in between the rotor and the brake pad and got twisted and torn off. Also, on one of the brake pads there is a chip out in the pad material. The brake pads and the springs are the original that came with the bike about a year and some 2,000km ago.

I'm wondering what could have caused this. Anyone seen this before?

It could be a number reasons for why they fail. For instance, knocking the pads/springs with the rotor while installing/removing wheels, may bend the springs. How thick are the pads (it's hard to tell from the photos)? When the pads get pretty worn, the springs will be vulnerable to interference with the rotor. Some people also try and bend the springs when replacing pads for more force, and that can place them at odd angles.

There was about 2mm of pad material left. How little is too little?

Every pad set comes with a New spring. ask Your LBS to save some springs from when they do a pad replacement for a Customer .

Or Looks like You have come to the point where You need new brake pads Yourself , springs are Included .

I already replaced the pads and the springs. I'm wondering what caused the failure in order to avoid it in the future.

I've sometimes found that the spring can shift during installation of the pads. I make a point of taking a close look at the finished set-up with a flashlight to verify that the spring is sitting right. Although how this could be your issue, considering a couple thousand kilometers of previous use is not clear.

SRAM/Avid says less than 3mm when measuring both pad material and backing plate. Shimano says .7mm of just pad material. Your results may vary.

I had the same thing happen with my BB7 front brake luckily while still in my neighborhood. My pads were very worn and I attributed it to that. Swapped them out and it has been fine since. On the outer pad adjustment knob there is an indicator in the middle that gives you some idea of pad wear.

just a guess, probably needed new pads, as you may have suspected. 2mm ain't much. end of springs may have gotten too close to the rotor, if the springs work like those on my XTs.

Yup, they work the same way on Avid brakes.

New pads, new springs, another 2000k before you have to worry about it again...