Is the spiral full of liquid or air when the bubbles by-pass it and go out the side hole? If the spiral is still full of air the air can act as a plug. I wonder if the air in the spiral will dissolve into the bulk liquid with time or something. I wonder if the bubbles will still bypass the spiral once its full of liquid.

Anytime a gas is in contact with a liquid that is not saturated with that gas it will dissolve into the liquid. In this case there will not be as much mass transfer between the gas bubbles and liquid phase as you would expect from a ladder set-up because there will not be as much contact area, but there will be some mass transfer. It may not be much though due to the limited gas-liquid contact area so the spiral could act more as a neat bubble counter.