[Butcher]

Bernoulli's Law states that energy is conserved, if energy is not conserved, then Bernoulli's law does not apply.
Also, if mass is conserved, then energy is conserved according to E=mc² - c is contant after all. Try again.
You still haven't offered a reasonable explaination of where the energy in the loop is actually going (hint: think friction).

The fact of the matter is, flow is uniform throughout the system. For a given flow rate and density, water will flow through an aperture of a fixed size at a fixed speed. Changing where it is in the loop won't change the flow, nor will it change the size of the aperture. Water doesn't compress very well, nor does it expand or contract much with heat, so the density can be assumed to be constant throughout the system (especially given the temperature difference is on the order of 0.1-0.2C). I'm really not seeing where this huge difference in pressure is coming from.