Electrical – Current regulation before or after voltage regulation

The LM317 power supply shown will not provide variable current limiting.
A separate LM317 can be added to provide this feature.

An LM317 current limits at a maximum value which it can survive and if this causes its temperature to rise to a manufacturer set upper limit it will progressively reduce the current to maintain itself at or below the maximum allowed temperature.

A current limiting LM317 can be added between the 28V supply and the voltage regulating LM317. During normal operation the CL LM317 will drop about 3 to 4 volts but otherwise have no effect. When its maximum preset current is reached it will drop whatever voltage is required to maintain current at or below the present limit.

The current limiter shown below is from the bottom of page 17 in the LM317 data sheet that you referenced.
The IC acts to maintain 1.25V across R1.
So Ilimit = V/R = 1.25/R and Resistor = V/I = 1.25/I

eg ir R1 = 5 ohms then Ilimit = 1.25/I = 1.25/5 = 0.25 Amp.
And to set a 500 mA current limit R = V/I = 1.25/0.5 = 2.5 ohm.

Place this circuit between Vsupply (28v) and the input to the voltage regulator. Note that either or both ICs may require heatsinking.

The pot drops 1.25V (= Vref) across it in all cases. So Power dissipation in the pot = 1.25 x Ilimit. For say 1A max current dissipation = 1.25 x 1 = 1.25 Watt.
As they note, R1 minimum = 0.8 ohm (based on the assumed maximum current ratin of the LM317 of a nominal 1.5A in some versions). Power then would be about 1.2 Watt. Now assume that the full pot value was 10 times as high allowing a 150 mA minimum current limit. IF the maximum current flowed through the whole pot (which is can'tr in this case) the pot dissipation would be about 12 Watts (10 x the minimum resistance dissipation. So an eg 10 Watt wirewound linear pot would probably do an acceptable job.
If Imax = 1.5A then Rpot at 1.5A = V/I = 1.25/1.5 = 0.83 ohm = sanity checks OK. So full pot value = 8 ohms. Now cheap and put a 0.8 ohm resistor in series with the pot and get a little less dissipation in the pot worst case.

For $US4.37/1 Digikey has this 5 Watt, 10 ohm linear rotary pot - lets see how it works out.
Sadly, the data sheet says little about allowable max currents, overload allowances etc. So ...
10 ohms, 5W. P= I^2R. I5w = sqrt(P/R) = sqrt(5/10) = 0.71 A.
Any section of the resistive element should tolerate 0.7A and you can hope fervently that using only part of the track at max current means that heat dissipation will be better and you can rate it somewhat more highly. It may even work. If we decide to limit Ilim max to 1A say the Rmin = Vref/Ilim = 1.25/1 = 1.25 ohm. Use a fixed series 1.25 ohm resistor of at least 2 W rating and the pot can be set at zero for 1A limiting.

HOWEVER ...

There are other ways.
A FET can be used to replace the resistor in the LM317 circuit and gate voltage varied. This is not hard to do but needs designing.

A binary codes switch can be used to select power resistors in 1:2:4:8 ratio allowing a stepped current selection.

BUT ...

The LM317 circuit was an easy introduction to what can be done. By instead using a series MOSFET and a low value fixed sense resistor in the main circuit and an op amp plus variable resistor that carries minimal current, an infinitely variable current limit can be provided at reasonably modest cost and complexity.

Ugly diagram below by way of example. Main merit is that diagram already existed on net :-). I may draw up a low side more complete version if time allows.

Current is drawn via Rs. Pot Vr1 sets a voltage point below Vin that drop across Vs is intended to match. If Vs drop is not large enough (ie current below limit) then FET is driven hard on and current limiter has no effect apart from drop in Rs.
If current exceeds Ilim then drop across Vs exceeds drop across pot and opamp switches to turn off MOSFET as required.

MOSFET can be either N Channel provided opamp power supply is enough > Vi that MOSFET gate can be driven on. Or MOSFET can be P channel and MOSFET needs only be able to drive to close enough to Vin to turn FET off when required. R2 limits range of Vr1 to a useful range.
Q1 needs to be able to dissipate up to about Ilim x Vin if you want to be able to short circuit system continually with Vout = Vin. Fold back current limiting or thermal shutdown is probably needed for longer term shorting but as is will save equipment.

UGLY!!! example diagram

The 10uF cap can be near the regulator where it does the most good. The inrush current with that size of capacitor should be no problem for a 3.5A fuse.

The fuse you have selected is a fast acting fuse but the thermal mass of the fuse will unlikely respond in the short time that it takes to charge a 10uF capacitor.

You will always have a certain amount of series resistance in the wiring, connectors, PCB traces that also will help to limit inrush current. Plus under normal circumstances I suspect that you would cycle the mains power switch of the 12V supply to power down your circuit instead of direct connecting the +12V. In this case the supply will have a fairly lengthy rise time at its output that limits the inrush current to same levels.

For grins I ran a simulation assuming a wiring resistance of 0.1 ohm and the 12V supply coming up to full voltage in 10us. Under these conditions the inrush current is ~12A for the 10usec rise time of the supply (linear rise used). My estimation that under such conditions the fuse material may over heat and blow only if the switching duty cycle was faster than the fuse can cool down from a 10usec pulse.

Do note that in the past I have had first hand experience of seeing fuses crystallize and fail after years of service being subjected to inrush currents. That was on the rectified DC lines of a Cromemco S100 chassis that had enormous capacitors. Your 10uF caps would look like specks in comparison. The Cromemco fuse in question was the 30A fuse on the 8V rail as shown (in the photo here). Inside the back of the unit the associated capacitor was the large soup can in the (closer part of this image). That capacitor was a 130,000uF / 15V unit.

Now if you had something like a 4700uF capacitor then there may be more concern. In that case you may want to select a time delay SloBlo type fuse.

In some electronics devices where there is indeed a very large inrush current possible the equipment is designed with a low ohms resistive device in series with the input. As the device comes up a special circuit either detects when the input caps are charged or just waits some nominal delay and then activates a relay that shorts out the low resistance device.