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It was set in the distant future, on a world humans had settled such a long time ago that Earth is never mentioned. Humanity enslaved a native species called spacules (or maybe spicules).These were hobbit sized creatures that were green and lumpy did not have discernible facial features. They communicated through honking and booming.They were seen as only semi-sapient and there seemed to be some factor that was holding their intelligence back. The humans had some sort of noble class that ruled the planet. There were other sapient species that had immigrated from other worlds.They lived in slum like areas and once lizard like race was not happy about the situation. Any idea what novel this is? I think it may have come out between 1994-1998
A few other details that I remember.
There was a young woman with red hair from the lower classes that worked as a servant. She was fond of a spacule kitchen slave name Sugar. At one point Sugar is making some pastries and the humans observes the was the light catches off the transparent membrane between the spacule's fingers make it look like she is folding rainbows into the dough.
There is also a warrior of the reptilian race from off world who is disgusted at how humanized his people have become,-right down to keeping the same pet animals that humans do such as dogs and jade-wing lizards.At one point he gets in a dominance fight with a young member of his race.The fight ends with the young one's neck in his jaws.He spares him and says something like "Your throat tastes like piss"
IIRC the human woman encounters what seems to be a sapient hologram at one point