I'm not sure if it is a good idea to thin varnish out as much you did. 1part varnish to 4 part thinner runs the risk, I think, of taking too much adhesion out of the varnish, though I must stress that I am no expert in this matter, and don't actually know which varnish you are using. But I do understand the problem you have described with bubbles. This problem caused a lot of discussion on a traditional fishing forum once, where cane rod restorers were getting bubbles when varnishing cane rods. I had this problem myself. I didn't entirely solve it, but warming the varnish helped. It makes it more runny, without having to dilute it so much to get the same viscosity. Varnishing in a warm room also helps. And the type of brush is important. I got good results with a squirrell hair mop, that has quite soft bristles. Technique is also important, as you have discovered.