Your plan will work fine. Be sure to use "glass block mortar" for the install, nothing else. Except if it is the kit thing then 100% silicone is used but it can make a helluva mess of things.
It will take three or four coats of Redgard to accomplish the waterproofing. My last one I used KERDI Mat for the waterproofing but I have it on hand all the time.
I would set the blocks flush with the wallboard surface so that the window/glass block can be trimmed with bullnose tiles all around thereby framing the window and giving it a finished look at the same time. The outside can be fitted any way it will work but should have a flashing tucked slightly under the glass block. The interior fit is the important one. Once the tile is installed and grouted the bullnose can be caulked to the block using acrylic or siliconized caulk and finished perfectly with a wet sponge. I would never use 100% silicone.