I'd like to continue to pursue oldnslo idea that the problem is related to one of the control components in the leveling circuit not working properly, or leaking. Even if it eventually ends up being air, at least I'll understand how this thing works.
As far as the suction system, I've had a thought. The suction lines for the gas driven pump and the electric driven pump are completely separate. The electric system pump lives inside the reservoir tank, including the filter. So if I only use the electric driven pump and I observe that the problem goes away, that would tell me there is an air leak in the suction lines that serve the gas driven pump. The gas driven suction lines include that upside down filter and the two large black hoses that are about 2" diameter. If the problem doesn't go away when I only use the electric pump, then I am inclined to conclude the problem can't be due to air. Why the bleeding process seems to make the problem better is a separate question and I can't answer it right now.