In the US army, why do Regular ranks co-exist with wartime/ conscription ranks?

It's called frocking and is still practiced to this day in all of the military services. It has nothing to do with wartime service per se.

An officer selected for promotion, particularly to the flag ranks (Generals and Admirals) will be permitted to pin on the new rank insignia prior to the actual promotion effective date which may be as much as a year away from the promotion announcement date. It's less common for an O-5 to be frocked to O-6, but I've personally seen it happen.

Additionally, reserve officers often have a permanent rank and a temporary rank. I've known several Brigadier Generals (O-7) whose permanent grade was Lieutenant Colonel (O-5) or Colonel (O-6) and several Major Generals (O-8) whose permanent grade was Colonel or Brigadier General. This practice is one way around flag officer manning levels imposed by Congress as the permanent rank is what counts for manpower purposes. If an officer retires while holding a higher temporary rank than permanent rank, he will normally retire at the permanent rank.

As an aside, Custer was not particularly successful as an officer. He and his entire unit were annihilated in a campaign that the average Lieutenant would have seen as futile. Heck, the average Private would know that disaster was the only likely outcome.

That was during a time when the Army of the United States and the US Army were different components of the same service.

Army of the US commissions were temporary as that component used to only exist during wartime. Whereas US Army commissions were your actual rank. It was possible (as in with Custer) to hold seperate commissions in both with different ranks

that was the policy at the time.

"Should an officer that has performed well during a war tour deserve a promotion in his "regular" rank? " they often did - see U.S. Grant for example.

Not applicable to 2014. System changed a century ago.

Of course, then again in places like Switzerland nobody can become a general except in war time then loose the title after war time. One problem is reservist and regular ranks seem to be two different titles, Someone can be a General in the National Guard but if attained another lower rank in the main services apparently still get's used that title in D.O.D communications from what I have gathered.