That bubble doesn't make any difference at all for cooking time. The air isn't touching the food. It's pretty much the same as if you had a tiny bag of air attached to a fully-sealed bag.
As you've already seen on other questions, vacuum sealing vs a good non-vacuum seal doesn't make any difference. The quote about excess air and oxidation was referring to storage and marination (presumably with the air in contact with the food) and mentions water displacement as a method that avoids those issues, so it does not apply here.
I suppose theoretically there could be a bacteria issue, but it wouldn't be contamination and wouldn't really be due to the air either. There can be bacteria in the bag with or without air - indeed, probably most of it is on the meat. The issue would be that the bag isn't fully immersed, and the part of the bag above the water isn't at the same temperature, so while you're cooking the meat at a safe temperature/time, bacteria might be able to grow in the lower temperature. But the solution there is just to make sure the bag is submerged, with or without a little bubble.
Cutting a hole to let the air escape doesn't really make much sense to me. If the hole is above the water level, the air isn't going to escape, you'll just have a slightly-open bag. If it's below the water level water will get in. If you really want to try to get more air out, just redo the water displacement method: open the top corner of the bag, pull it down to let the water push the air out the top, and close again.