Castration of subordinated men was generally preferred over killing. Typically after a major battle, as we see in the OT it was not at all unusual for the conquering army to exterminate all of the men and sometimes the women and children, except young virgins.
This practice is true to the present time as seen in South Sudan. The Ottoman Empire was highly regulated in assigning its subjects to particular roles. Very early they learned that eunuchs were very useful subjects and that staffing their army with Muslims tended to diminish the Muslim male population, so they filled the ranks of the army with captured eunuchs. In time, however, the army rebelled and warred against the Muslim captors and frequently established their own independent domain, as in Egypt.
Back to Daniel, it would have been perfectly acceptable practice for the Babylonians to spare young men and boys to serve them, with the condition being that they could not interbreed with Babylonian women.
