First the blocks you are describing seem plenty big enough for a 28" wall.  You are talking about 7 blocks high.  I would personally use a taller block but I like making the install go easy.  Smaller blocks I believe are more work.  

I have used this glue - http://www.liquidnails.com/products/landscape-wall-adhesive-LN905

However I only glue the caps - top layer to the second to top layer.  The other layers shouldn't need it.  Either way the glue will last only a few years if you are in a temperate climate.  

I also would not install blocks without a lip for any area that will be walked on that is that high.  Having a lip or not really matters with the amount of frost your region has and the amount of traffic in the area.