How can we understand the difference in the above texts so as to be able to reconcile them for a fuller understanding?
These verses do not contradict each other ;-)
The context of Romans 2:25-29 can be summed up in one word: faith. Faith is the one ingredient missing from verse 25 and it is the one ingredient prevalent in verse 29.
Romans is a passionate plea from Paul to his fellow Israelites. "Righteousness" is a key word in Romans and Paul uses it, like salt. According to [some of] the Israelites of Paul's day, they believed that they would obtain righteousness through works of the law but Paul believed their righteousness was empty unless it was coupled with faith.
Paul consistently brings up the irony of comparing the Israelite's lack of faith to the Gentiles that see Christ as their messiah. The Gentiles didn't do any works of the law because the law wasn't part of their heritage, yet Paul makes it clear that their faith earned them righteousness.
"What shall we say then? That the Gentiles, which followed not after righteousness, have attained to righteousness, even the righteousness which is of faith. But Israel, which followed after the law of righteousness, hath not attained to the law of righteousness. Wherefore? Because they sought it not by faith but as it were by the works of the law. For they stumbled at that stumblingstone." (Romans 9:30-32, KJV)
The "stumblingstone" is Christ.
In verse 25, Paul is recognizing that the Israelites, having been given the law, are to keep with the law by being circumcised. But he's also saying that the law (in this case, circumcision) is worthless if they break another law because breaking the law is a sign of lacking faith. He isn't saying the opposite. He isn't judging the Gentiles by laws that aren't their own (they didn't circumcise).
Verse 29 is a specific reference to the faith of Abraham. Circumcision was brought to his people through him. What's remarkable about Abraham is that he showed great faith before he was circumcised. This faith earned him "righteousness." You can compare verse 29 to the one below, especially "he is a Jew who is one inwardly" to the last sentence below.
"Cometh this blessedness then upon the circumcision only or upon the uncircumcision also? For we say that faith was reckoned to Abraham for righteousness. How was it then reckoned? When he was in circumcision or in uncircumcision? Not in circumcision but in uncircumcision. And he received the sign of circumcision, a seal of the righteousness of the faith which he had yet being uncircumcised that he might be the father of all of them that believe, though they be not circumcised, that righteousness might be imputed to them also... For the promise, that he should be the heir of the world was not to Abraham or to his seed through the law, but through the righteousness of faith." (Romans 4:9-13, KJV)