Any hillside that has been worked up takes time to settle. If your soil was not prone to liquidification before it was disturbed it will not be, due to your terracing. The biggest problem with hillsides is a layer of clay a foot or more below the surface that prevents water penetration and once all the soil above becomes saturated and heavy tends to slide on the slippery clay layer. If you were living in such a slide prone area it would usually be public knowledge. Al

I have a hillside garden. My understanding from the pros that worked on my yard is that the best thing to do is to disturb the underlying hillside as little as possible. You build up, not excavate. You want the bottom of the retaining walls on but not too deep into the natural grade. And it needs to be stronger than wet mud and water; if you've ever seen video footage of a mudslide in action, you know that it is not something a few moss rocks will hold.

My backyard is up the hill from my house. Closest to the house, the wall is stucco-clad cinderblock/ rebar. The next two walls are pressure-treated square timbers held in place by I-beams placed in concrete. (Beautifully faced and capped in redwood.) All of these have French drains, gravel, weep holes and that black moisture barrier cloth. The soil in these is heavily amended-they are like gigantic pots.

It is only about halfway up the garden that I start having dry-stacked stone walls. The lowest rock is set firmly on the clay, the wall is built up, and amended soil is placed behind the wall. They don't like to build these walls more than 18 to 24 inches tall. I've had a series of these moss rock walls in my garden for 12 years and haven't had any problems. Occasionally a rock pops off from an expanding root, but in general I think that they get stronger as clay settles between the rocks and the plants fill in.

So... to answer your question, yes you can and should amend your clay soil, but not until you have retained the slope.

There are some landscape designers and contractors on this board- and if I'm wrong I hope they speak up.

Thanks for the insights, guys.