I have been reading with interest because I had a similar problem. In the trans cases there is a small metal line that runs vertical and takes the oil under pressure from the pump on the bottom up to the piston threw the top cover if I remember correctly. On my tractor that steel line had ruptured causing the arms to be slow and very weak. It sounds very similar to what you have. The bubbling you are hearing is the fluid being pushed back out that line. You will have to remove the top cover to verify, Which it sounds like your going to have to do anyway. Just be sure to get the lift handle rods in the proper position when you go back together. It's been a while since I fixed mine so time may have stole some of my memories! I think I had to take the pump out also to drive the old tube out, maybe you'll get lucky and it will come out the top, If that does happen to be the problem.
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Today's Featured Article - Madison's County - by Anthony West. Philip Madison has been a good friend of mine for quite some time. He has patiently suffered my incessant chit chat on the subject of tractors for longer than I care to remember, and on many occasions he has put himself out, dropped what ever it was he was doing, to come and lend a hand cranking handles, or loading a find onto a trailer. Although he himself has never actually owned or restored a tractor, he was always enthusiastic and always around helping with other peoples projects.
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