Any bubble should disappear up thru the fuel-delivery system on a healthy, tight fuel system. The only air can be from a lower source if not the gascolator itself.
This would be explained by the leaky fuel-measurement system hoses, and it would also be explained by the leaking gascolator-sump valve.
I once (not on a 170) experienced a consistent loss of engine power during takeoff. It would happen every time unless the fuel boost pumps were on "HI". (It was a model that did not require pumps on for takeoff.)
It turned out to be the inner-liners of the rubber fuel delivery hoses were collapsing from the engine's fuel demand during takeoff. The collapsing liners would further restrict fuel delivery at high fuel-flow demand at takeoff power.
Moral: If a loss of power occurs in a gravity system which does not indicate leakage, it's possible the inner fuel hose liners have collapsed.
Good mx practices will replace standard engine-compartment, flammable-fluid-carrying hoses every 5 years or engine overhaul, whichever first occurs.
The so-called "Teflon" hoses may be good until engine overhaul.
Hoses may be ordered from Aircraft Spruce to duplicate your existing hose. I recommend having your new fuel hose "fire-sleeved".
http://www.aircraftspruce.com/catalog/a ... ey=3010399