Want to build a tree ring but am worried about health of tree

I have a large tree in my yard that's about 4 feet across at the base. I would like to build a retaining wall ring around it and fill it with mulch but, after reading some information about it, am worried about harming the tree. You will see in the picture below where there was previously plastic edging surrounding the tree. Since I would have to dig down a few inches for blocks, and I don't want to hit the roots, I planned on extending the ring out about 2 feet from what is currently cleared. Does it look safe to create that ring and fill with enough mulch to cover the dirt? I would expect the mulch to be about 3 inches deep in some parts since it isn't perfectly level. Thanks for any advice you can give me!

picture of base: http://i.imgur.com/U5Q2T.jpg