He is out of bounds now. He rejoices in man's lovely, peculiar power to choose life and die—
"He is out of bounds now" might refer to how crazy it seemed then for a white colonel to lead an all-black infantry. Of course, now that Colonel Shaw is dead, he's also out of the bounds of life.
This "choice" to "choose life and die" might be another small nod to the philosopher William James, who wrote about free will. Lowell is likely referring to the soldiers' choice to fight bravely until death.
In the case of Col. Shaw, it seems that he chose to live his life a certain way (leading his African American troops into battle) and, now that he's dead, he's off on the sidelines, checking out all the other choices made by those who live after him.
when he leads his black soldiers to death, he cannot bend his back.
By the time the 54th infantry fights its last battle, the Colonel is so exhausted from fighting that he can't bend his back. He's got some serious aches and pains from the hard life during war. He'd be a good candidate for a Bayer commercial.
These lines show how hard these guys fought. They were utterly exhausted and depleted, but they chose to enter battle in spite of all of that.
Of course, keeping a stiff back means that you're upright, facing what's ahead. Shaw, despite his travails, faces his fate head on.
This is the first true glimpse of a typical dedication poem. When we first read the title, we thought this was going to be the subject and tone of the whole poem, but we're just getting into it now, thirty-nine lines in. Lowell illustrates how hard, and how steadfastly, the soldiers fought for one another, and for the Republic.