I would set the blocks flush with the edge of your concrete pad. That way when water runs down it will go right past and not have a chance to work through any cracks or crevices that may show up over time.
I've only run rebar horizontally in block one time and that's because the block wall is also serving as a retaining wall (holding back about 48" of dirt) due to the slope of the grade. In that case I had two coarses that utilized a v-shaped block filled with rebar and concrete. I believe it was called a bond-beam or something like that.
Unless you will have side pressure against the block I don't think it's necessary.
John
