Let the given expression be $f(x) = \cos^2 \frac{x}{4} + \sin \frac{x}{4}$.
To find the maximum and minimum values, we can express the function in terms of a single trigonometric ratio.
Using the trigonometric identity $\cos^2 \theta = 1 - \sin^2 \theta$, let $\theta = \frac{x}{4}$.
Then, $f(x) = 1 - \sin^2 \frac{x}{4} + \sin \frac{x}{4}$.
Let $y = \sin \frac{x}{4}$.
Since $x \in \mathbb{R}$, the angle $\frac{x}{4}$ can take any real value. Therefore, the range of $\sin \frac{x}{4}$ is $[-1, 1]$.
So, $y \in [-1, 1]$.
Now, the expression becomes a quadratic function of $y$:
$g(y) = 1 - y^2 + y = -y^2 + y + 1$.
This is a quadratic function in $y$ representing a parabola opening downwards (since the coefficient of $y^2$ is negative).
The vertex of the parabola $ay^2+by+c$ occurs at $y = -\frac{b}{2a}$.
For $g(y) = -y^2 + y + 1$, we have $a=-1$ and $b=1$.
The vertex occurs at $y = -\frac{1}{2(-1)} = \frac{1}{2}$.
Since $y = \frac{1}{2}$ lies within the interval $[-1, 1]$, the maximum value of $g(y)$ (which is $\alpha$) occurs at this vertex.
$\alpha = g\left(\frac{1}{2}\right) = -\left(\frac{1}{2}\right)^2 + \frac{1}{2} + 1$
$\alpha = -\frac{1}{4} + \frac{2}{4} + \frac{4}{4}$
$\alpha = \frac{-1+2+4}{4} = \frac{5}{4}$.
The minimum value of $g(y)$ (which is $\beta$) must occur at one of the endpoints of the interval $[-1, 1]$ because the parabola opens downwards and its vertex is within the interval.
Evaluate $g(y)$ at $y=-1$:
$g(-1) = -(-1)^2 + (-1) + 1 = -1 - 1 + 1 = -1$.
Evaluate $g(y)$ at $y=1$:
$g(1) = -(1)^2 + (1) + 1 = -1 + 1 + 1 = 1$.
Comparing the values at the endpoints, the minimum value is $\beta = -1$.
Finally, we need to find $\alpha - \beta$:
$\alpha - \beta = \frac{5}{4} - (-1)$
$\alpha - \beta = \frac{5}{4} + 1$
$\alpha - \beta = \frac{5}{4} + \frac{4}{4} = \frac{9}{4}$.