Doesn't have to be anything fancy or expensive to line the inside of the alleyway. Wood will take a beating over time and will rot in the weather more easily. Keep that in mind depending on how long you want to use that set up. As for making the sides higher. You could make the side, which you don't work the cattle from, higher and leave the side you work on lower.
It's easy to raise all the sides up, but then you will probably need a raised 'walk way' beside that alleyway too, so you can reach in.
If it were me I would try to line the inside of the alleyway, so they can't use the side walls to climb up anymore and maybe make the 'outside' sidewall a bit higher. I'd give that a try before adding more material, time and energy to that set up.
That's just my five cents, everybody has their own ideas.
P.S.: Hot shot, put the hot shot into the cupboard and only bring it out when you are loading to ship/sell cattle. Cattle aren't too thrilled going into the alleyway to begin with, as something usually happens once they're in. Something they don't really care for, getting zapped on top of it just doesn't make friends.