36" is very narrow when talking about tall shrubs and trees. Be sure to look for "fastigiate" varieties. Even then, you must inquire as to the expected mature width as well as the height of plants, since fastigiate is simply narrower than normal. I think you will have to put any new plants about where the retaining wall is now. Remember that even after the stumps have been ground down there will still be roots below the surface that may interfere with replacement plants.

I know there are evergreen, fastigiate varieties of yew, juniper, arborvitae, spruce and holly. A few of these are quick growing, but none of them will produce a hedge quickly. Talk to local nursery personnel about what you want to accomplish. The photos above will give them an idea of how many plants you may need.

I always plant a few feet away from the fence. Lets say three feet from the fence is good. In your case the tree would be atop the retaining wall. I think I would remove the wall, just in that section.

Look at Willows, fast growing.

This is hard- I think that maybe personally I would not be investing any big bucks into hardscape until the roots have rotted and the soil settles, and it will.

I had numerous stumps ground down/soil replaced in '07 and it's ten years later and the soil is settling to a remarkable degree- over a foot in some areas. Certainly enough to ruin a lovely new wall. I sure hope they grind it deep for you.

If you're wanting to leave the stump, you could plant around it such that the surrounding plants mound over and "smother" the stump, covering it entirely. Since this is at the back of the lot and would be viewed from a distance, this would not be difficult to do. You couldn't build decent masonry work too close to the stump, but you could pull it back away from the stump, ending the retaining walls a few feet from it, and rebuild them in such a way as to look like wall ends. This means they would terminate in some pier-like way (as if they were a little chimney that is filled solid and stood 3" or so above the wall.) 3' depth of planting space within the retained area is pinched, and not large enough for the plants typically called "trees." But you could plant tall shrubs and grow them in the tree form so as to get screening above the fence. An example would be beauty bush. Not sure what the best plant for you to use where you are, but if you look around you can find large shrubs that are bare at the bottom and not too many trunks so would make candidates for tree form.