oi this thread has been busy, well there was recently a satellite (or weather balloon for you FE er's) that map the changes in gravity across the entire globe. I'll try and find the article on it later.
again distance does play an effect on gravitational pull between two objects, for instance jupiter does not accelerate towards us at 9.81 m/s^2 even though it is still attracted by the Earth's gravitational pull. Like mentioned before with the sheet analogy space flattens out the further you get away from the bowling ball.
and as for the idea of space bend, space-time does bend. The Earth's rotation causes twists in space-time due to the earth's mass, there have been experiments to prove that.
Someone also said that there maybe other forces bending light. This is a possibility but those theories have yet to be fully tested so I cannot say whether or not those are true, but there's an incredible amount of data supporting Einstein's theory.
Another known effect is the Gravitational Faraday Effect which is incredible small but is still there.