Yes, the block reward will decrease and the difficulty will increase, the question is how much. As with most other investments, nobody knows exactly what the reward will be and the investors are those who believe this will be profitable taking everything into account. Different people will have different evaluations of the situation.
As an extremely simplified model you can consider what happens if the difficulty remains the same forever and the block reward diminishes. A quick calculation shows that in this case 1MH/s will generate 1.04145 BTC over its lifetime.
Now lets assume that the BTC exchange rate remains fixed, while difficulty increases by a factor of 2 every 2 years due to hardware advances. When the block reward halves it will also necessarily have a negative effect on the difficulty - my guess is a factor of 2^(1/3) decrease for every halving. Taking all this into account, the lifetime reward per MH/s is 0.421304 BTC. Maybe the difficulty will climb faster due to some low-hanging fruit such as ASIC, maybe not. Let's just say that half a year ago some people expected the difficulty to soar due to the BFL products, but so far that didn't exactly happen.
Changes in the BTC exchange rate also complicate the dynamics. Difficulty follows price with some lag, so a price rally increases USD-denominated profits, but with a different profile than direct BTC investments.
The bottom line is that if you think mining bonds are currently overvalued, you shouldn't invest in them, and maybe even try to short them.
Does GLBSE allow dividend reinvestment
No, but you can just reinvest manually (or with the API).