Er, no, I'm not thinking of a "much bigger defeat". I'm thinking of a more convincing defeat, but I'm not thinking of "make a desert and call it peace" - the combat casualties would probably be considerably lower than in our timeline.
But more importantly, I'm not convinced by the idea that democracy falls as an obstacle to militarization, because the US has institutions and a democratic tradition - and because, um, again, look at France post-1871. France in 1870 was an empire; in 1871 France lost Alsasce-Lorraine, and it was a democracy for quite a long time after that. I'm not sure they've stopped; I've not looked in the last few days.
As for
This is a fantasy. The first steel naval vessel anywhere in the world was laid down 1873 (launched 1876) and was French; the first Royal Navy all steel vessel was Iris (LD 1875 launched 1877). "Very quickly" would thus have to mean "more than a decade after the war" if the US Navy is procuring their first all-steel ships in a comparable timeframe to the MN and RN instead of doing so many years later as historically, and there is no reason to assume that all the inventions would happen to be made earlier in the US just because the US was more determined; it is much more parlous to assume the US roughly keeps up with world technology on this issue if they're willing to spend the (considerable) funds to keep up.
I'm not sure what you mean by "modern artillery" (I hope this doesn't mean artillery with hydro recuperators!) but it seems unwise to assume the US can produce artillery significantly more modern than that which the CSA could buy overseas, since they would be able to draw on Armstrong and Krupp and Whitworth as many nations did (and suffer the delay of being in an order queue) while the US here is attempting to construct a modern artillery company able to compete with the established industry of Krupp and Armstrong and to do so from scratch (and suffer the delay of all the learning involved in training up an assembly line). It would (at considerable cost) result in the ability to construct domestic artillery on par with world standard, but either the US Army makes substantial orders on an ongoing basis or the arms manufacturer has to become an arms exporter simply to keep up with the cost of maintaining capability.