I think the EP served two purposes. First, it was meant to forstall recognition of the Confederacy by England or any other European country. Second, it was meant to degrade the South's ability to wage war by removing a source of military construction and agricultural production. By removing this "contraband" Lincoln hoped to force Confederate soldiers to assume the roles left by the freed slaves.
Not freeing thoses slavs under Union control was a political decision, to forstall border states from joining the South. Stan