Is nationalism always dangerous?

Faust argues strongly for the nationalism that existed on the Confederate side of the fight during the Civil War era and leading up to it. I agree that even despite their limitations on communication, technological development, literacy, etc., they still banded together under their Confederate identity to adapt and create solutions to their shortcomings. They were devoted to their own causes, and worked together in those causes to develop an identity. Nothing appears to be inherently wrong with this.
Reactions to their situation led to cultural characteristics, such as the orality and the use of song, unique to the American South. This appears to be a positive result to a nationalistic identity.
On the negative side of things, the South held its own economic and religious beliefs above the North's for its own personal gain in the dispute about slavery. Faust mentions they considered themselves working out God's providence (sounds familiar!) and divinely chosen in their endeavors to succeed. This illusion is tied to their nationalistic identity and view of themselves.
While it is likely impossible to avoid ideologies incorporated throughout cultural systems, at what point does nationalism become dangerous? Can the negative effects of nationalism be avoided (without the sacrifice of the positive characteristics)? Can nationalism exist without illusion?