Eastern Tennessee holds some rail junctions and would potentially have hydropower and labor available. Yes, there are people who are opposed to it, but if there is little hope of international assistance I do not think we will see a low level guerilla war for decades to come. Some will move, others will succumb. Northern Georgia/Atlanta could also work.1. So how do the industrialize in an area that really hates the confederacy?
2. The south was dominated by the planter class who really didn't like industrializing, why would they encourage it?
Planters will want cheaper transportation for moving goods. Railroads will be cheaper than moving goods by canals and internal canal projects (like Tennessee-Tombeege) are very expensive. If they can also build textile mills and ship out finished products instead of just raw products they can also charge more and increase their profits.
3. Why would the USA support the confederacy, especially if the confederacy likely takes to purging east Tennessee?
Why would they purge the area? If they win the war it means little or no support from Washington/Union and the area is recognized as CSA territory. If they are smart they will leave the area alone and offer amnesty in exchange for oaths of loyalty or something to that effect.
4. Yeah I'd like to see them try to actually conduct wars with out a navy.
Who argued that they would lack a navy?
5. Yeah and the CSA cares why?
The UK is likely to be a major comsumer of CSA goods. Money changes people's behavior very effectively, if the UK or other large trading partner(s) decide that doing business with slaveholding nations is no longer in their interest they can boycott and strangle the CSA economically.
As for a CSA army in 1895 - they are likely to have strong cavalry with carbines and rifles along with infantry armed with bolt-action rifles. Their military will have training and backgrounds in the American and British tradition. There could be exchange of officers and establishments of chiefs of staff by this time and if there are large scale slave revolts or guerilla activity then it might give the CSA experience in those fields.