Relevant text:
"A creature can hold its breath for a number of minutes equal to 1 + its Constitution modifier (minimum of 30 seconds).
When a creature runs out of breath or is choking, it can survive for a number of rounds equal to its Constitution modifier (minimum of 1 round). At the start of its next turn, it drops to 0 hit points and is dying, and it can't regain hit points or be stabilized until it can breathe again."
"The transformation lasts for the Duration, or until the target drops to 0 hit points or dies. "
"If it reverts as a result of Dropping to 0 Hit Points, any excess damage carries over to its normal form. "
In this case, since the creature suffocated, it both dropped to 0 hp AND died, both of those things happen simultaneously when the creature involved does not have death saving throws. So, one could argue that the section on excess damage etc. does not apply. The reversion was not a result of dropping to 0 hit points. Similar to Power Word Kill.
https://www.sageadvice.eu/2016/05/0...-targeted-with-power-word-kill-dead-or-alive/
If it has death saves (like a PC), then it is converting back not from death, but from being reduced to 0 hit points, in which case, it has all its hit points. However, it is still "dying" - nothing negated that condition. Since it cannot breath, it cannot stabilize. Whether it is "conscious" or not is completely a matter of interpretation.
It's safe to assume you would only put in like 200lbs of water, so that when the transition back occurs, it more or less fills the volume of the bag. You can calculate the amount of air in the bag if you want, but really, the water is just a "fast and dirty" option. Could just as easily spend 10 minutes sucking out air with a straw, so that it has no air in it.