I asked Hobbico to send me a free replacment o-ring for the needle valve. They sent a new, black, slightly harder o-ring that, I presume, is supposed to fix the bubble problem. I installed the o-ring and went flying today. It initially worked great - no bubbles. After a minute or two of flying, the engine went lean. I landed. The engine was hot and there were massive amounts of bubbles appearing after the fuel went through the needle valve, not coming from the tank.

I let the engine cool down and restarted it. Same thing - no bubbles for a minute or so, then lean, hot engine and massive bubbles abain.

I noticed the needle valve was pretty hot. I riched the needle to the point just before the engine starts 4 stoking and flew it. The engine performed flawlessly with no bubbles. I think that there may be enough heat transfer from the case into the needle valve body to actually cause the methanol in the fuel to vaporize, forming bubbles. It takes about 140 degrees to vaporize the methanol. When the needle is part of the carb., it stays cooler since it is further from the head and has air rushing through it to keep it cool.

That seems to be the only scenario that fits the bubble problem. When you isolate the needle valve from the crankcase, by cutting it off, or using a different needle valve, the problem goes away. I plan to try reduce heat transfer from the case into the needle valve body, by drilling holes through the web that connects the needle valve to the back plate. Or I may cut off the needle valve area and reattach it with an insulator plate to stop heat transfer.

Perhaps someone else could experiment with lean/rich needle settings and see if they have the same results.