Steve,
Sounds like you are on target. But, trying to repair a leak on the backside of the dam may not work. I would certainly consider the clay blanket on the inside, even if it decreases your volume. (It won't decrease the volume much at all).
Remember this, water always seeks the path of least resistance. If there is any breach in the clay, anywhere, water will find it, and leave. So, be confident in your engineering plans and your contractor. Make someone with expertise accountable to you.


Teach a man to grow fish...
He can teach to catch fish...