Actually, water doesn't so much cancel out powers as it cancels out the user's ability to activate them. Take Aokiji, for example, who froze out a massive region of sea. Sea is made of seawater. Luffy was actually able to stretch underwater in the Arlong arc, he was just too powerless to do it for himself.
So I would say it actually is legit that the bubble allows travel underwater. The user is still screwed if he gets stuck underwater while not in a bubble (and wouldn't be able to create a bubble in that situation), but if he is in a bubble, then it makes sense that he is not affected, because there is no water touching him. And as we have seen, water doesn't actually cancel out DF powers.