Slavery may be ethically dark, but isn't that dependent on degree? You could have more of an "integrate a lower class into society that isn't our race" or, a more goblin esque "the beatings will continue until morale improves."
I could see Toady implementing this as a "war criminal" system at the most, but a better implementation would be a change, even an overhaul of the crime system.
For instance, depending on who or what the prisoner of war was or is, they could be assigned different things:
Hauling/Cleaning/Menial Work: The prisoner or group of prisoners are watched by a guard dwarf or two as they work. It's slower than just having a dwarf squad do it and takes space, but is light and morally accepted by most races.
Imprison: The prisoner of war is jailed like any other criminal dwarf.
Execution: The prisoner is killed, often publicly (requires a workshop- such as gallows). Very few races do this, and the few that do do so rarely.
Release: The prisoner is released to the wild to attempt to make it to their home. Should they make it, and depending on the civilization, relationships will get better or worse.
Force Fight: The prisoner is forced into a military squad. They are imprisoned during idle times. Depending on their happiness, they will turn against you or actually fight, so it's important to keep them fed. Dwarves consider this unacceptable, but Humans will do this.
Integrate: The prisoner(s) will form into a new group, and can be zoned, maintained, and given jobs as such. Most of this group are cooks and fishermen, hunters and leatherworkers. They can be given a zone they must stay in or risk being jailed.