I embedded a UiApp in a webpage in Google Site that contains a flextable. The width and height of the gadget can change depending on how many items are in the flextable; so when
Though it cannot be set from gadget pref, maybe you can code your Gadget code so that the frame height is updated when you change the html content. See this nice example:
https://developers.google.com/gadgets/docs/ui#Dyn_Height
The "leave blank for 100%" only works on the width attribute. You will have to determine some appropriate height for your script. I do not think there is a work around.
Furthermore, if you were able to set the height to 100%, that tells the browser to make the gadget fill 100% of the container (i.e. the page around the gadget). It does not tell the browser to fill 100% of the contents inside.