Aeration, phosphate sponges, water purifyer and removing scratches

I'm looking for a bit of advice about my tank and water supply.

I am in the process of getting a hood to accommodate 4 lights, purchasing
some finer gravel & laterite and have recently purchased a Fluval 303 which
I am very impressed with (quiet and seems to circulate the water well).

1.  I had the spray bar of the Fluval under the water to minimise aeration
of the water to stop possible C02 losses, however after a few days it
looked as though the fish were gasping at the top of the tank. (The tank is
sparsely planted at the moment, but will be fully planted when the lights
go on And at the moment the C02 is not working.)
I moved the spray bar out of the water and that seems to fix the gasping -
but I would rather it be under the water).  Am I correct in thinking that
when I add the plants there will be enough 02 without extra aeration?

2.      My aquarium bloke sold me a phosphate sponge and told me to use
that in the tank because of the high level of phosphate in our water
supply.  I did so, but would like to remove it and replace it with a normal
fluval sponge when the plants/gravel/laterite/lights are in place.  Are
these sponges the only way to remove phosphates, and are they a bad idea?

3.      Same aquarium bloke would like me to buy a water purifyer unit (a
cheap one, not an RO unit).  I'm note sure about this though.  After it
filters the water, you have to add a pH adjuster and Electroright (no
ingredient list on the side of the bottles).

A government water analysis gave the following reading of our tap water:

Nitrates 1ppm
Silicates 10 ppm
phosphates 1 ppm

Does this sound within reasonable limits or does a water purifyer sound
like the way to go?

and finally,

4.      Does anyone know of a way to remove scratches from glass aquariums.
My mother in law suggested toothpaste.  Any other suggestions?

Thanks for anything you might be able to offer.