As the wood breaks down the height of the swale bank will shrink. If the bank is supposed to be holding back water I could imagine a bank burst situation.
More likely I can foresee problems if you choose to plant on such a wood-fillled bank. As the wood breaks down and the bank compacts, any perenials will have their roots disturbed as soil falls away. This is why tree plantings are usually recommended just down slope of swale and hugelcultures, so that the roots are in stable soil but can benefit from the concentrated moisture in the soil.
Moderator, Treatment Free Beekeepers group on Facebook.
I think that the intention is to dig a swale, or trench, and then fill it with wood. This is what I have done, and there is nothing to collapse. It is just a trench filled with wood and organic matter. As I understand swales, they are not necessarily meant to hold back water, but to collect and spread it. Perhaps if one was to use wood in a swale berm, it might collapse or shrink, but I think it would only collapse and wash away if it were on a steep slope which had masses of water rushing down it. Or if you buried wood in the wall of a dam, well, that wouldn't be wise at all.
Burying wood in a trench or swale is basically like building a below-ground hugelkultur, and seems to be a great way to get some organic matter into otherwise sandy and humus-lacking soil - which is exactly what I have. My first 85' garden bed filled with logs and organic matter performed beautifully this past summer. Our sand tends to 'eat up' smaller organic matter that is incorporated into it, so this was the best quick way to get some soil building action happening. Also, our sand tends to 'shed' water, so it runs right down the hill and off the property. So, the buried wood beds also help to capture the run-off and get it into the ground where it belongs, similar to a swale.
There is a lot to learn. When first starting out it can be overwhelming. Because everything impacts everything else, it can be hard to take the first step.
Here is a thread which just had some photos posted of land restoration done by various means. She includes descriptions of what she has done as well, using various methods to slow the water down, deposit sediment where grass can grow. I don't know whether she is working with sandy or clay soil, but she uses what she has. Just in case you want to take a look.