Instead of using 270 pF caps, replace them with 2 120 npo caps in parallel
and see what happens to the "dip". It should be considerably less. Can you post
a picture of the passband?
Generally, a 1dB dip would just be barely audible. A 3 dB dip splits the passband
in two. What would happen if one were to try a CW signal through it? It is also
likely that the SSB signal would not fit on the wall of the passband properly.
Hence distortion.
john
AD5YE