Is it a straight jacket or not? You and I have discussed this many times, I have NO reason to fight with you over it.
The difference between those two bits you quoted? One is about individuals (the part where you can play a CE dwarf) and the other is about the entire race as a whole. Which is why the racial alignment is a straightjacket: now I, as a DM, have to effectively rewrite everything and provide player material if I wanted to have dwarfs have a different racial alignment (or any alignment). As a player, I have to come up with a decent reason why my dwarf, alone out of how many, is CE.
Without racial alignments, it makes sense. Maybe my CE dwarf had an abusive upbringing or started hanging out with the wrong crowd. Maybe the entire area where my dwarf grew up was filled with terrible people, even if none of them harmed me. You know, normal things that happen to make people CE (without delving into supernatural stuff or being raised by monsters, at least).
But a society where nearly everyone is LG? That CE dwarf is unlikely to have had an abusive upbringing, and if he had, it's likely that someone else would have noticed and stepped in before it got that bad (since LG people are
going to step in to protect children). And in a typically LG society, what would the wrong crowd or terrible people even be? Sure, I can imagine a NG or CG, or even an LN dwarf naturally occuring in such a society, but anything else? It makes very little sense. So you're left with "bad seeds" which... is kinda weak. Nobody likes a bad guy who was just born evil.
(And I (and others) would still like to know what you have actually
lost by removing racial alignments.)