I've dug a "U" shaped hole in my backyard that will eventually be used as a lounge/barbecue area. For the most part I will be using an old pressure treated deck for the retaining wall. Here is what I plan to do. 1. Set 4x4's every 4ft
2. Use 2x4's & 2x6's for the outside of the wall against the soil
3. Use the old 5/4 deck boards for the inside of the wall
Here is my question, the gap that is created by the 4x4's between the 2x4's and 2x6's. Should I fill that in will soil or leave it hollow?

You need to get the lmber off the ground. Use concerete post blocks to add spacing between the deck and ground. If you leave the timber on the ground, moisture and insects will cause the lumber to decay and weeken. Go to Lowe's or Home Depot and the can assist in designing a deck (free).

I can picture what you are wanting to do with your retaining wall but...
I work for a hardscape design build firm and I would not recommend using treated lumber for your retaining wall. One in time it will rot and you will once again be building a new retaining wall. We use versa-lok for our retaining walls and it is wonderful. It may be more expensive to start with but you will not be replacing it like you will the treated lumber.
Two, always use stone(57 stone) to back fill behind any retaining wall for safety precautions. If you have gaps between your wall, it will not last. This only allows for wear and tear and your wall has a big chance of collapsing beneath time, erosion and weight pressure.

I hope that this helps and does not hinder your plans! Happy retaining wall building in the future!