Fast copy/rename database, not mysqldump
It sounds like you have a lot of indexes and/or you have not set innodb_buffer_pool_size is too small on your testing server.  If you have "indexed every column", repent!

A way to get a full disk copy instantly, regardless of its size, is to use LVM.  You would have the database sitting there, then you would take a "snapshot" and use the snapshot.  Eventually would would toss the snapshot.