This is an Aluminum block so it will not rust like an Iron block. But rust from other parts will deposit in the water lines within the block reducing their diameter thus decreasing the cooling of the block leading to a warped/cracked/damaged block which is beyond repair.
As long long as you are not sure that the system is leak free you cannot be sure whether water reduction is due to weak gasket. First make sure the hoses, radiator etc are in No leak condition. If it reduces water even then its the gasket.
Also it depends what kind of bubbles you are seeing coming out if bubbles are coming one after the other in a tandem its the gasket. If they come and then stop then come after a few seconds its Air in the system.