Worth keeping in mind, however, is that
You'd probably have to get the Union to accept their 'neutrality', and that of Kentucky, which means the war has to start with an amphibious landing in South Carolina. And/or a major expedition down the Mississippi without basing in Kentucky. Either of those would increase the Union's military headaches massively.
So, although the South is far weaker, the North isn't a whole lot (or any) stronger (if Virginia refuses conscription, how can it be imposed on New York, say), and war is far harder to prosecute 'at arms length'.
It might not actually be shorter.
Worth keeping in mind, however, is that (using the "neutral Kentucky in 1861" as a template) "neutrality" will last only as long as it benefits one side or the other, and the US is in a far better place to work the refs, so to speak, in terms of political support for joining the war effort than the rebels would ever be...
Likewise, remember that the two large calls for the troops in 1861 (75,000 mobilized 3-month militia and then 500,000 3-year-volunteers) and the large call in 1862 (300,000 3-year-volunteers) were not conscription; the state-by-state quotas were just that, quotas, and if any border state had fallen short, there were (in 1861-62, at least) more than enough true volunteers from elsewhere in the US to make up the numbers, even if they were serving outside "their" state organizations.
There's also the point that even during the "neutral Kentucky" phase, there were plenty of Kentuckians organizing into "home guard" units that were loyal or rebel in all but name, as well as crossing state lines to volunteer for "Kentucky" units that were directly supported by the US or rebel governments.
If anything, the "neutral" perspective might actually bring more recruits/volunteers to the respective colors, given the political situation inherent in the border states (highly localized mini-civil wars, as in Missouri) and some very useful individuals and resources - as examples, some of the southern-born officers who resigned from active duty in 1861; they may (or may not be) willing to march on Charleston, but they presumably can be made use of on the frontier as proto-galvanized Yankees. Likewise, Nashville (for example) was the second-most industrialized city in the rebel state (after Richmond) which isn't saying much, but still no Tredegar for the rebels; the Harpers' Ferry Arsenal presumably would also remain functional and in operation, which means the US retains control of both HF and Springfield... plus the Norfolk Navy Yard, and unfettered access to Washington, among other useful places.
Finally, don't underestimate the USN and USMM ability to launch and sustain an amphibious operation at a distance in 1861; the DuPont-TW Sherman's Port Royal expedition included more than 12,000 soliders, and the force Goldsborough-Burnside landed at Roanoke early in '62 was larger. Butler's force at New Orleans was smaller (~6,000 troops) but still; there are three divisional-sized efforts in less than a year. Likewise, the US had successfully mounted Scott's expedition to Veracruz, as well, so its not like the USN and AUS were making it up in 1861-62. They had a doctrine and practical experience.
My bet is the rebellion would be over, in any practical sense, by the fall of 1863.
Best,