When a water heater expansion tank is installed on a closed system with the inlet facing down, wouldn't it trap air on the water side of the diaphragm? Is there a way to bleed this air out or would that trapped air dissipate over time?
I believe that most brands allow installation in any orientation; however, some recommend an "air-purger" in the system to ensure an O2-free environment.
wouldn't it trap air on the water side of the diaphragm?
Yes, it seems that air could collect there. Air there would not affect function (it would just compress, along with the diaphragm, upon pressure increase due to thermal expansion). A disadvantage would be corrosion of the tank where air was present, but I would think that the diaphragm would fail (as they always do) long before the tank would fail due to corrosion. Another potential disadvantage is difficulty when replacing, as the water in the tank would empty onto you whilst unscrewing unless you drained the whole system (assuming no alternate way to drain).
There is an anecdotal advantage to mounting it this way: supposedly any debris/dirt would not collect on the diaphragm, supposedly lengthening diaphragm life...