No fluid dynamics background, but not necessary. If the pressure on the line drops below the vapor pressure of the fuel, you will get vapor pockets. At room temperatures, the vapor pressure of Diesel is very low, less than .01 psi. I doubt the pump can pull that hard, so at first glance it's unlikely that this is the cause of your cavitation issues. Diesels are generally considered immune from vapor lock for this reason.

However, a constriction due to a design error can certainly drop the line pressure, due to the Bernoulli effect. This is why pinching the line results in bubbles. The other factor is that the fuel is heated, and the hotter it gets, the higher the vapor pressure, and the greater the tendency to vaporize. I'm not sure how hot the fuel that's in the tank can get. It will warm slowly as hot fuel is returned to the tank, and can theoretically reach engine operating temperature. At 80C, vapor pressure is probably close to atmospheric pressure, and the pump wouldn't have to pull very hard to cause a problem. It probably doesn't get that hot, but maybe. So it's possible that the combination of a constricted feed line and elevated fuel temperature could result in a bubble.

You need to check two things:
- what is the temperature of the fuel in your tank after a period of running?
- what is the pressure in the line?

To fix this, you would need to increase line pressure or decrease fuel temperature, or both:
1) A larger ID fuel line would increase pressure.
2) Some sort of cooler on the fuel line, preferably close to the tank.
3) Install a secondary pump as close to the tank as possible (in the tank would be best).A pump in this location would increase line pressure on the way to the main lift pump
4) Impractical, but raising the tank would help.

One final thought: Diesel as it comes from the pump isn't perfectly pure, nor is it a single chemical. There can be water, alcohol, gasoline or other components in the mix, with varying vapor pressures.