Bruce,
Usually blocks are staggered, full block starts first row, half block starts 2nd and so on, this makes it easier to curve the wall.
Were it me, I think, using your drawing I would make the block walls as you describe, the vertical openings are filled with concrete. I would cap the top of the block wall with a half round layer of concrete all along the top edge, at the same time I filled the cells in the block.
I would skip the concrete bottom and put the liner inside the block. Then wrap the liner over the cap and fill the back with a layer of gravel, then dirt to cover the edge of the liner. You need to fill the liner with water prior to anchoring it.
The gravel at the bottom of the outside of the wall should assist with moving water from above to around the pond. You can then top the exposed liner with whatever you have handy that suits your eye.
