Yes, that 12" of dirt *may* eventually fall towards the pool wall. You should dig another foot out horizontally from where the dith is now, widening it to about 2-feet. Then clean the ditch down to the pool wall bottom. Every spring get on your hands and knees under the deck with a small hand-pick and shovel and throw the dirt out that fell down against the pool wall during the winter rains. If you don't want to do that, and don't mind putting up another pool in 10 years, then let it go like it is.
And that ain't no sunken pool in a hole that needs any retaining wall :-) Are you kidding me? This (last picture) http://www.poolforum.com/pf2/showthr...ol-quot-thread Is a Sunken Pool with RETAINING WALL!