Your solution sounds quite easy and viable, yet nobody seems to build dams that way.
When I have some easy DIY project solution that the experts don't use, I later find out there is usually a reason they don't do it that way.
I am NOT an expert, but I believe there may be problems with your cinder block dam.
Cinder block walls are very strong at resisting vertical loads. They are not very strong at resisting lateral loads. If you build a 10' tall cinder block retaining wall to hold back soil, once that soil gets water saturated, it will almost always crack the block wall. I am worried that the hydrostatic pressure of your water column will crack your block wall. (It will certainly try to push it over. You will have to pour a very strong concrete footing.)
I also worry about the freeze/thaw cycles on your vertical wall that is NOT in compression to help it resist horizontal joint cracking. I expect your grout joints will crack.
Perhaps you can use your wall for strength, and use mastic to secure a vertical pond liner onto the wall for the actual permanent sealing?
I hope I am wrong, and your project will yield positive results. Your best advice to rely upon would be if some better building experts than I, drop into your thread.
