Tried my trusty Oxford English Dictionary, but it mentions "Origin obscure"
Another "dixie" definition is given by OED ("An iron kettle or pot, used by soldiers for making tea or stew" from the Persian "degcha") but it is probably unrelated to the Dixie in question. It does however bring the expression "the pot calling the kettle black" in mind, particularly regarding those who selfrighteously point their fingers to "Dixie " as racist.
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What is the etymology of Dixie (F, US)? - Pavlos Sep 21 2001, 4:23:03 AM