My physical observations are simply that there is small gas evolution poured into water and the white solid turns yellow.
Is what's happening correct?
What happens, happens! Whether you find it correct or not is a question which has no sense. It just happens
.
Hg(2+) ions are very prone to hydrolysis. The yellow color you have is the color of HgO/Hg(OH)2 (better: HgO.nH2O, hydrous mercury oxide). Without a coordinating ligand, like Cl(-) ions, Hg(2+) really easily is hydrolysed, with the formation of acid as a side reaction. It surprises me, however, that the white crystalline
mass shows hydrolysis to such extent, because they are still wetted with H2SO4.
The small bubbling most likely does not tell very much. It might be due to small bubbles of air, trapped in the solid, or small amounts of dissolved gas, driven out of the water. When you dissolve solids in water, it is quite common to see faint bubbles of dissolved air, which are expelled by the ionic compound.