You are absolutely right about the soil level being too low- you are giving yourself a bit of extra humidity and less air flow around the base of the plant. Indoors, this would be disastrous, but if your plant is still alive, then great.

Algae is not a problem. Mold could be depending on what it is- there are beneficial fungi in soil too. But the bottles are clear, right? Light to the soil is letting algae grow, and when the roots get to the light the plant can get stressed.

Wrap the bottles in tinfoil to keep light away from the roots, and once you think you are safe from rabbits, cut the bottles down to 1 inch above the soil surface. There are other ways to prevent rabbit damage... like a chicken wire tent, or a cage around each plant.