The Union would have used whatever tools necessary to ensure victory over the Southern rebellion. If that meant legions of dwarfs doing battle against the defenders of slavery then so be it. At least the dwarfs would have been volunteers. The fact that the South viewed blacks as unworthy of being combat soldiers up until such time that their cause was already lost points to a major failure in your rebel leadership. Their contempt for blacks and their conviction of their inferiority was so great that they would rather see their cause go down in flames than compromise. And once the flames were licking at their heels, then and only then would the consent to sending slaves to do a free man's work. And of course had they won that slave would have gone back to bondage where he belonged. Such was the Southern mindset.