I just sealed my small 10th acre pond with powdered Bentonite. I spread it dry, tilled it in, then backfilled with dirt to protect the Bentonite layer. It is sealed and doing great.
Bentonite does get very slick and does not harden when saturated so I do not know if the Bentonite will work on a dam, but it sounds like you have a reasonable plan. I would pour it thick and cover it with soil to protect the seal. Compact as best you can before filling with water.
I would make sure what you are getting is PURE, UNPROCESSED Sodium Bentonite, not Calcium Bentonite.
Good luck, let us know how it does.
