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At 33, Madison argues that had the states been abolished, it would have been necessary to reinvent them. But Hamilton, in his five hour Grand Design speech that opened the Convention, argued for keeping the states but stripping them of their sovereignty. Is Madison shading the truth here? How would Hamilton’s plan, if adopted, have changed the nature of the country? Did the results of the Civil War and New Deal do that, and to what degree?

I don't think Madison is "shading the truth" as HE understood things at the time but is worried that ratification opponents are close to gaining the upper hand in the debate because of what he feels to be sophistry on the part of the anti-federalist. He goes out of his way to define terms and lay out what he feels to be the limits of various forms of government so that the other side will not be able to so easily misstate things in their future articles.

If Hamilton's plan had been adopted there simply would have been no union so there is no point in discussing how it would have changed the nature of our union at that point. But Hamilton's plan HAS been adopted over time buy mostly fabian methods beginning with the decision written by John Marshal in Marbury vs Madison. It could not be fully implemented by those means however and the final touches of the conversion were applied at the cost of nearly a million lives between 1860 and 1873.

Hamilton, and the big money interests behind him, wanted a mercantile empire like the one England had become and that is what we now have in my humble opinion. For the last 150 odd years the states have behaved as if they WERE mere administrative districts instead of the sovereign states they originally were. Only very recently have we seen efforts at reassuming their intended roles by a few of them.

“In the next place, the state governments are, by the very theory of the constitution, essential constituent parts of the general government. They can exist without the latter, but the latter cannot exist without them.”

Joseph Story, Commentaries on the Constitution, 1833

On the other hand, the duty imposed upon him [the president] to take care, that the laws be faithfully executed, follows out the strong injunctions of his oath of office that he will "preserve, protect, and defend the constitution." The great object of the executive department is to accomplish this purpose; and without it, be the form of government whatever it may, it will be utterly worthless for offence, or defense; for the redress of grievances, or the protection of rights; for the happiness, or good order, or safety of the people.

Joseph Story, Commentaries on the Constitution, 1833