Hello fellow Hoosier! /forums/images/graemlins/grin.gif I think you would need the services of a hydrologist to accurately answer your question. I have built a few ponds, including my own, but there are a huge number of variables for what you are asking to be correctly answered. Just to give you an idea, here are a few important variables that would need to be taken into consideration to properly answer your question: the type of soil you have, the width of your dam at the base, the width of your dam at the top, whether the construction of your dam used the same soil as the surrounding soil (was your soil trucked in?), the current depth of water at your dam, the proposed depth of water against your dam, (to calculate the pressure currently exerted against your dam vs the pressure that will be exerted against it with a higher water level) how old is your dam, was your dam constructed with a keyway, what is down hill from your dam, etc.
Without knowing all of those variables and more, I wouldn't want to dispense any advice as to raising the level of your pond. It likely would be okay, but there are lots of possible issues. As far as the actual water goes, generally the deeper the water, the less problems. In general, sunlight has the greatest affect on the portion of your pond that is less than 3 feet deep. With sunlight, you get all sorts of growth. Not all bad, but certainly not all good.