Hi there - I'm sorry that you're having such difficulty with Gus.
Based on your description, I actually would lean toward a behavioral or anxiety issue. Most cats with allergies also have scabbing and itching in other places. When I first see a cat for over grooming like that, I do try steroids to see if they have a response. If the steroid stops the over grooming then it's likely allergy. On the flip side, if the problem is anxiety related, the steroid won't help - and this seems to be the case for Gus.
We call it psychogenic alopecia - it's almost like an obsessive compulsive disorder in people and can be managed with environmental modifications like decreasing stress and increasing play time, etc. Sometimes medications can ease the symptoms too.
One other thing to include on the list of possibilities is bladder discomfort. I have seen cats lick their belly for years before we diagnosed bladder stones. If their bladders hurt, they will sometimes lick their belly like this too. The best way to diagnose a bladder issue is a combination of imaging like an X-ray and possibly an ultrasound and a urinalysis (urine test for inflammation, infection, etc).
Here is a little more information on psychogenic alopecia:
To directly answer your question - I don't think that bitter apple will really make much of a difference, especially if the behavior is pain or anxiety related. In fact if it's anxiety related it may make things much worse.
I hope that these thoughts give you a great starting place for discussion with your vet! Please let me know if I can answer any more questions :)