Could democracy have survived in the Confederacy?

Yes, democracy could have survived. The civil war was about ideology as much as anything else. While states rights was the war cry of the south, they wanted states rights so that they could decide for themselves if they could keep slavery. Northern states pretty much agreed that slavery was evil and southern states didn't see how they could run their farms without slaves. Personally, I think both sides were wrong. The north was wrong to feel that they could force that kind of law on the south. The south was wrong to want to keep slavery. The loss of a couple specific states rights has led to further loss of states rights. Now about the only rights that a state has is to determine the color of their license plates. Even then, the Feds don't want them to look too much like someone else's.