...because it is replaced with new hotter water at the original position
Ah, I took your diagram too literally (no heat source) particularly because I took (probably incorrectly) your mention of 'bubble' to mean an 'air bubble'.
However, I think this may well be a "Eureka! Moment"!
I think that we (certainly I) have probably totally confused ourselves with all the talk about 'convection' and, in particular, "circulation around convection loops", because I now don't think that has really got anything to do with it.
Referring to your diagram, if one continues to heat water at the position of your 'lower density white part', then all the newly heated water would rise up that arm of the 'loop', progressively increasing the amount of hot water at the top of the loop (in both arms). Although the heated water in 'the other arm' of the loop would still be 'at the top' of the water in that arm (and could not fall 'by convection', since the water below it was cooler), the bottom of that region of hot water in that 'other arm' would gradually be 'forced down' by the increasing amount of hot water - despite the fact that convection/buoyancy was keeping uit above the cooler water below.
Given that, in the actual situation we are discussing, that 'other arm of the loop' is the cylinder then, yes, this appears to be (at long last) an explanation of how the cylinder gradually fills with heated water from top downwards. QED!
Put another way, this is absolutely nothing to do with convection or 'circulation in loops' but is merely a consequence of the fact that as progressively more hot water is created and 'rises' to the top of the 'loop', this increased amount of hot water has risen to the top of both 'arms' of the loop, one of which 'top arms of the loop' is the upper part of the cylinder. The important thing (per all the confusions) is that nothing is 'circulating' - the hot water is simply staying at the top of the loop (both 'arms') just as it should - and all the talk about 'water rising and causing more to be drawn in' has really just confused the issue even more!
Phew! Unless I've got this wrong, it's fairly satisfying to have at last 'got there' (since we all know that, because it 'works', there had to be an explanation!). I may award myself a drink!
Kind Regards, John