You can do a skim coat on the blocks with joint compound. I have skim coated all kinds of stuff over the years, including concrete, and had it work just fine.
You need to be sure the blocks always stay dry. You don't want your skim coat peeling off.
To do a good job, you need a systematic approach. It will save you time, money and frustration. I have a skim coat page on my website. Check My Profile for the url.