I am sure the US strategic situation is much poorer than it was OTL but perhaps in the long run it will force a larger mobilization of resources. The US may reach a higher strength but it will have to survive a few more years to do it.
Well I can say for certain that the army that fought at Little Big Horn in OTL's 1876 will bear remarkably little resemblance to the US Army of TTL's 187
The problem is that the British and the CSA share an enemy, but not a definition of victory. If the USA and UK sign a peace deal, even one favorable to the British, it is quite possible that the UK cheerfully leaves their co-belligerents overextended and alone.
I would argue that for any understanding of a hypothetical war with Britain in this period,
this is key. Britain and the CSA do not have the same goals, and their goals align only so far as it serves
British foreign policy. The Confederacy may think the British are coming to save them, but the British certainly don't think that!
Both nations serve a means to an end for one another. Unlike the French in 1777 however, the British in 1862 are not plunging into what amounts to a European War to help a rebellion in the far flung regions of North America. They can exit the conflict at their leisure, but the CSA is engaged in a fight to the death.
They may need to slow the tempo of operations and may need to adopt a more defensive stance but you should not assume that supplies are the same as zero in the US in this period, if you have been following this thread for a while you know there has been some considerable discussion on the exact effects of supply and the potential for boosting domestic production of gunpowder. As to lead you need to ask yourself just how many lead roofs, lead soldiers, lead pipes and lead caskets there are in the Union States in this period? Not very economical but if the demands of war require it.
While I would agree with you that the Union here is in a bad way I would just recommend keeping your mind open to a range of possible outcomes.
The US has come remarkably close to what we would consider 'total war' footing without actually being at 'total war' footing. The fact that their basically scooping up feces to make powder ought to be indicative of the lengths they are willing (and must) go to in order to keep the rest of the war going. The civilian economy in the North has been
extremely discomforted by the war. Whether that is the lack of iron to make new stoves, the lack of salt and saltpeter for domestic meat packing and mining, the lack of coffee and other luxury goods, the lack of coal to heat homes and businesses, or the dislocation of East - West and North - South trade to ensure the armies in the field survive, people are making more sacrifices in this war than they did in OTL's 1863. It simply isn't a case of reading about the war over a cup of chickory coffee, people are feeling acute losses of what they were used to having in peace time.
There's a reason TTL Democrats won more seats than OTL's 1862 elections, and why Democratic governors are in charge in New York and New Jersey. And there's a few states whose governorships could go Democratic in 1863 as well.
Where's the CSA getting their powder from?
Where
@History Learner said. Though I would note that even if Britain backs out of the war, the idea that the US could just up and blockade the CSA again is very much in doubt!