Ok, I'm with you now. I was thinking that the piston was long enough to block the water inlet tube until the piston was all the way up. Nope!
So Lever Machines have saturated group heads!
The Olympia Cremina diagrams are awesome: this one in particular shows the internals of the group- Hydraulics
There appears to be a passage to release the water above
the piston which I've never seen in a Pavoni group diagram. But la Pavoni must have something like this, otherwise it would be impossible to raise the lever.
It is still not clear to me how the air under
the piston is displaced. I know from using the Presso (no laughing please) that air trapped above water will simply be compressed rather then forced out.
The only thing I can think of is that once the piston is in 'pre-infuse' position the water comes in at a terrific speed and there is enough agitation to allow most of the air to escape through the bed of coffee.
If there was a small
layer of air still trapped above the water it would presumedly be forced back into the water inlet tube when bringing the piston down (before the 'valve' was closed off).
Where oh where does the air go? There must be something obvious . . .