I'll start proving by induction that $a_{n+1}-a_{n}=(\frac{1}{2})^{n}(a_{1}-a_{0})$. You did the case $n=1$, so that's done. For the inductive step, we look at:
$$
a_{n+2}-a_{n+1}
$$
assuming that $a_{n+1}-a_{n}=(\frac{1}{2})^{n}(a_{1}-a_{0})$ is true for $n$ (induction hypothesis). Then,
$$
a_{n+2}-a_{n+1} = \frac{a_{n+1}+a_{n}}{2} - a_{n+1} = -\frac{a_{n+1}-a_{n}}{2} = -\frac{1}{2}(\frac{-1}{2})^{n}(a_{1}-a_{0}) = (\frac{-1}{2})^{n+1}(a_{1}-a_{0}).
$$
Now, that identity is proven. We're left to see that the sequence is Cauchy. Thus, we must show that $\forall \epsilon > 0$, $\exists N\in \mathbb{N}$ such that $n,m>N \implies$
$$
|a_{m}-a_{n}|\lt \epsilon
$$
Fix some $\epsilon > 0$. We can obvioulsy assume $m \gt n$. Then, $m=n+k$ for some positive $k$. Then, we look at
$$
|a_{m}-a_{n}| = |a_{n+k}-a_{n}| = |a_{n+k}-a_{n+k-1}+a_{n+k-1} - \ldots -a_{n+1}+a_{n+1}-a_{n}| \\
\leq |a_{n+k}-a_{n+k-1}| + \ldots + |a_{n+1}-a_{n}| \\
= (|\frac{-1}{2}|^{n+k-1} + \ldots + |\frac{-1}{2}|^{n+1} + |\frac{-1}{2}|^{n})|a_{1}-a_{0}| \\
=\frac{1}{2^{n}}(\frac{1-(\frac{1}{2})^{k}}{\frac{1}{2}})|a_{1}-a_{0}|\\
=\frac{1}{2^{n-1}}(1-\frac{1}{2^{k}})|a_{1}-a_{0}| \\
\leq \frac{|a_{1}-a_{0}|}{2^{n-1}}
$$
Then, you pick an $N>0$ such that $\frac{|a_{1}-a_{0}|}{2^{N-1}} < \epsilon$, given that that quantity gets as small as you want, and decreases monotonically.