Really? Then why the phrase "rather than" instead of "not"?
Seems to me that Madison is indeed speculating, saying that it shouldn't be necessary for Congress to intervene since the states can resolve their differences themselves -- but that Congress can intervene if necessary.
"Rather than" means "and not". There is no commonly accepted meaning, now or then that makes in inclusive. Can you produce an other use of the phrase "General Goverment" in any other writings that support the assumtion that it means only the legislative branch?