CB1, That's too bad you had a poor experience, but it sounds like your new contractor knows what he's talking about. As long as he can establish a solid core trench behind the initial dam, that should not leak. Have him put the 2 antiseep collars at the front edge and then middle of the core. Since you're going to drain the dam anyway, you might have him try to excavate out alongside the 8 inch pipe and put another antiseep collar towards the front side of the old dam. Then fill in that trench with solid clay as well. Make sure you're out there with a gas powered tamper to get good compaction along the pipe and antiseep collars.
In 5 of my dams we have a valve installed towards the backside of the dam. They are actually placed about 20 feet upstream from the downstream toe of the dam. Hence they have anywhere from 8-12 feet of the dam fill above them (so they won't freeze in our South Dakota winters). The valves are brass and have a 2x2 inch square handle on the top. We built a square out of plate steel that fits over this handle, and then welded a 15 ft piece of 1 inch square tubing to it. We use this "wrench" to open and close the valve. To access the valve we installed a 6 inch plastic tube above the valve to the surface (just like water systems use). You can buy a cap to install on the end of the pipe to keep the elements out.
Now one precaution. In NRCS documents they talk about the risk of putting a valve on the downstream side of a dam. The theory is that the water pressure in the pipe could cause it to blow right out through the backside of the dam. Think about having a straw in your mouth and blowing through it. If you keep up the pressure, but the end gets pinched off, the straw would blow out of your mouth, unless you held on tightly with you lips.
To prevent this from happening what we did was to construct a concrete footing of 4x4 feet and 6 inches thick (with rebar) on the front side of the dam where our tube comes out. Basically the end of the tube is in the middle of this footing. Make sure you compact the soil well where you put this footing, as you don't want it to settle.
Then we put a 90 elbow on the tube (facing up), and installed a vertical 6 foot section of pipe, with a trash guard at the top. We also drilled numerous 1 inch holes in the vertical pipe to help keep it from getting plugged up. Then on top of the footing we constructed a form around the elbow and pipe (approx 2x2 ft and 1 ft high). We left some rebar sticking up out of the footing to link into the new concrete that we would pour into this form.
This is probably overkill, but the few hours of work and 30 or so bags of concrete and some rebar were worth the peace of mind.
Definitely have your contractor put in a principal spillway tube with antiseep collars. Schedule 35 or 40 should work. Have him place metal culverts over the ends to keep the sunlight off the plastic. Or you can just keep paining it to keep the UV damage from occurring.
Since your dam is going to be much wider than necessary, you might consider making it taller as well, assuming the topography works.