The film was released in February 1927, and was a terrible flop for Keaton. Here's the review from Variety at the time:

The General is far from fussy. Its principal comedy scene is built on that elementary bit, the chase, and you can’t continue a fight for almost an hour and expect results. Especially is this so when the action is placed entirely in the hands of the star. It was his story, he directed, and he acted. The result is a flop.

The story is a burlesque of a Civil War meller. Buster Keaton has the role of a youthful engineer on the Watern and Atlantic RR, running through Georgia, when war is declared. He tries to enlist, but is turned down, as it is figured that he would be of greater value to the cause as an engineer. His girl, however, won’t believe this, and tells him not to see her again until he is in a uniform.

The girl is on a visit to her dad when 10 Union daredevils steal the train in the middle of Confederate territory and start off with it, intending to burn all bridges behind them, so that the line of communication and supplies for the enemy shall be cut. The girl is on the train, and Keaton, sore because his beloved engine has been stolen, gives chase in another locomotive.

There are some corking gags in the picture, but as they are all a part of the chase they are overshadowed.

Note: "meller" is Variety slang for "melodrama"

Meanwhile, in the New York Times:

In spite of his bursts of speed and flashes of ingenuity, Johnnie Gray, the hero of "The General," the new picture at the Capitol, is hardly the person who would be trusted with a locomotive. This rôle is played by Buster Keaton, who appears to have bitten off more than he can chew in this farcical affair concerned with the days of the Civil War. Mr. Keaton still preserves his inscrutable expression; he looks like a clergyman and acts like a vaudeville tumbler.

The production itself is singularly well mounted, but the fun is not exactly plentiful. Sometimes laughter yesterday afternoon was stirred up by slapstick ideas, and at other junctures the mere stupidity of the principal character had the desired effect.

During a few chapters in the beginning there was more or less interest in this feature. It happens when the preoccupied Johnny Gray is driving his dear old locomotive, known as the General, through the Northern lines. He is chased by other locomotives equally speedy and graceful. The other love of Gray's life, Annabelle Lee (not a locomotive but an attractive girl) spends part of her time putting anything from toothpicks to great lops into the locomotive fire. Together, hero and heroine throw out timber and crates to hinder their pursuers. One wonders that the man who has sense enough to defeat his enemies is so utterly brainless when he throws wood on the tender.

This is by no means so good as Mr. Keaton's previous efforts. Here he is more the acrobat than the clown, and his vehicle might be described as a mixture of cast iron and jelly.

This was the general critical consensus for the film, and it performed poorly at the box office. The commercial failure of the film ended Buster Keaton Productions' autonomy, with distributor United Artists forcing him to use their Production Manager for his next two films. After that, Keaton returned to a major studio, signing with MGM.

There were some reasons for a tepid response, particularly within the industry. The gossip at the time was that Keaton had lost self-control, with the film coming in at almost twice its original budget ($10m today), expensive location filming, a falling out with producer Joseph Schenk over the overly-elaborate production including 1,500 extras, lawsuits over on-set injuries and the like.

Keaton had wanted to shoot the film in the South, using the areas where the historical events had occurred. He also tried to hire the real General locomotive. On both counts he was rebuffed when people found out his film would be a comedy. In 1926, there were still living Civil War veterans and immediate relatives. That the film was told from the viewpoint of a Confederate eager to fight for "the cause" wasn't as much of an issue as the perceived insensitivity of a comedic treatment.

On release, it wasn't as controversial as Birth of a Nation had been a decade before. In part, as a comedy it was inoculated against ideological attacks. Keaton, too, was a relatively progressive personality who had given minorities better treatment in his films than many of his contemporaries.

As for heroes and villains, aside from Keaton, neither side comes off particularly well. North and South alike are comic foils to our hero. Unlike Birth, the politics were wisely pushed aside. Even Keaton's character being a Southerner is in service to the comedy, as it positions him as an underdog sided with a hopeless cause.

The fault in The General, as Variety put it, was that it was perhaps too epic, and this didn't sit well with his slapstick routine. There was too much drama, not enough pratfalling. While today we can appreciate its masterful appropriation of civil war photographic techniques, these were largely lost on a general audience.

In any case, business setback aside, Keaton was unharmed by the reception of the film in terms of social context. He was still popular and had a long subsequent career. He had a run of bad box-offices at the time of The General, and while his first MGM film The Cameraman was a commercial hit, MGM stripped him of creative control and he became a mere contract star.

If you want to see a controversial release, try Birth of a Nation. That really did set things ablaze.