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they kept them out for balancing reasons

Well yes, during the civil war, some of the Grunts and Hunters wanted to side with the Elites (Halo 2) and they did. But in the majority of Halo 3, we mostly see Covenant Loyalists with Grunts and Hunters because 1. The Grunts fear the Brutes more so than the Elites due to constant threats by the Brutes and 2. Hunters may share a strong distaste for humans or some other unknown reason as to why they sided with the Brutes. To answer your question simply; they are on both sides.

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