Just browsed through the Lieber Code (which feel free to dissent but I believe is the best way to judge laws of war in the time), no specific reference to using prisoners as human shields, but a couple vague references to not subjecting them to "intentional suffering or indignity" (art. 75) which you could argue a human shield would cover.
However I don't think he would count as a prisoner as "A prisoner of war is a public enemy armed or attached to the hostile army for active aid, who has fallen into the hands of the captor, either fighting or wounded, on the field or in the hospital, by individual surrender or by capitulation." (art. 49). If this bluecoat existed he wasn't in the hands of the enemy army, rather an individual captor and per art. 74 "A prisoner of war, being a public enemy, is the prisoner of the government, and not of the captor." Therefor he wouldn't count as a POW until Forrest turned him over to his command.
Interestingly enough given the title of the painting, under the laws of war he technically wasn't a "hostage" as a hostage is someone who is voluntarily exchanged to the enemy for a temporary period of time to for example secure a truce. (art. 54). So I really think captive is the best technical term. Still its strange, even if the captive wouldn't brag about it, you'd think there'd be more eyewitness accounts from the yanks who witnessed it who would identify him and corroborate the story. I'm not that sure about it, but as with many other fun anecdotes, I choose to believe it happened.