I think you're missing the point that heat will then also flow out through the retaining wall, so I don't know how well that game plan would work. The ground only freezes down to the frost line in winter because of geothermal heat coming up from below. But, if you look at you're retaining wall, there won't be any heat coming laterally from the side, so I expect the ground would freeze behind the retaining wall as well. But, the basic premise is sound... if you raise the ground level, you theoretically should raise the frost line too.
I'm not entirely sure if this would be a better solution, but I believe it would be, and you can probably convince yourself of that by Googling the phrase:
"Frost Protected Shallow Foundations"
without (or even with) the quotes.
In some places in the US they build houses and buildings on concrete foundations that only extend down a few feet into the ground. That is, these buildings don't have a full basement, but only a concrete perimeter wall that's about 3 feet high on which the building is built. In winter, the ground under these buildings can freeze, causing ice lenses in the soil, and that in turn can lift the building on one side or at one corner and cause the shallow concrete foundation lift on that side or corner, and that causes it to crack.
One way they've found to protect buildings with shallow foundations from frost heave is by literally INSULATING the ground around the building. The result is that heat loss from the house keeps the ground immediately around the building from freezing, and that prevents any movement of the foundation.
They excavate around the perimeter of the building, attach thick (4 inch thick) extruded polystyrene foam to the exterior of the concrete wall, and also lay that same thickness of polystyrene insulation down on the floor of the excavated area before backfilling. That is, you have a slab of insulation buried horizontally around the perimeter of the building. All the soil above that insulation is frozen solid and all the ground below it is warm because of heat loss from the house (that would occur anyway, it's just now you're taking advantage of that unavoidable heat loss to get it to do something for you.). Because the soil under the building's foundation doesn't freeze, there's never any frost heave under the foundation, and there's no movement to cause cracks.
I'm thinking that instead of raising the ground level, why not do the same thing as shown above. I expect it would be much more effective.