Small-tube boilers with low-grade German coal

Would small-tube boilers still work with Germany's lower-grade coal?

Yes, if designed for that fuel, although soot and reduced performance would remain problems.

Fuel quality is separate from the basic arrangement of the boiler. The furnace burns the coal while water circulates through tubes in the heated structure, so the machinery can be designed around the expected fuel. Low-grade coal would create more soot, clogging, and performance loss, and German ships could still struggle to reach their nominal speed. Even so, a purpose-designed small-tube installation would remain an improvement over the machinery it replaced.