In brief: Hegel denies that rationality limits freedom — for him it is freedom’s only shape. Free is not the will that reaches into a range of possibilities, but the one that remains with itself in what it wills. Whether that may still be called freedom is the real point of dispute; it is not settled.
The distinction on which everything hangs
The usual concept of freedom — being able to do what one wants — is for Hegel not freedom but arbitrary will:
When one hears it said that freedom in general consists in being able to do what one wants, such a notion can only be taken as a complete lack of cultivation of thought […]. Arbitrary will, instead of being the will in its truth, is rather the will as contradiction.
Groundlines, § 15 Remark
The contradiction lies in this: the chooser depends on what he chooses from. The content is given to him — by drives, inclinations, circumstances — and freedom consists merely in reaching among what is given. Whoever holds himself free because he can choose between A and B has only the choice, not the content.
What Hegel puts in its place
Free is the will that has itself for its content — which is determined not by something else but by itself:
Only in this freedom is the will unqualifiedly with itself, because it relates itself to nothing but itself, so that every relation of dependence on something other thereby falls away.
Groundlines, § 23
And § 27 puts this into a formula that at first sounds like a circle and is not one: the abstract concept of the Idea of the will is „the free will which wills the free will“. What is meant is: free is a willing directed not at something outside it but at the conditions of its own willing — that is, at relations in which willing is possible.
Why this is not paternalism
Here lies the suspicion: if only the rational will is free, one can declare anyone who wants something else unfree and force him to his happiness. Hegel blocks this road expressly at two places.
First: § 132 determines the „right to recognize nothing that I do not see to be rational“ as „the highest right of the subject“. Whoever strikes out this sentence no longer has Hegel.
Second: § 206 requires that assignment to an estate happen not by birth or by authority but through „subjective opinion and particular arbitrary will“ — the arbitrary will he has just disparaged is here given its right. And § 260 demands both at once: the universal is not to hold „without particular interest, knowledge, and will“.
Duty as liberation
The sentence on which opinions divide stands in § 149:
But the individual has, in duty, rather its liberation […]. In duty the individual liberates itself to substantial freedom.
Groundlines, § 149
This can be read as a demand hard to bear and as an experience. As experience: whoever has learned a craft is freer in it than the beginner, although he follows more rules. As a demand: the sentence can be used to declare any imposition a liberation.
The open point
Hegel gives no criterion by which it could be decided from outside whether a given content is rational — the demonstration is supposed to lie in the course of the book. That means: whoever wants to test the concept of freedom must test § 1–§ 360. Whoever wants to misuse it can appeal to it without going through that course. Both have happened in the last two hundred years.
Sources. Groundlines § 4–§ 29 (the development of the concept of the will), especially § 15 Remark, § 21–§ 24, § 27; § 132 and Remark, § 149, § 206, § 260. – Encyclopaedia (1830) §§ 469–482. – Literature. Charles Taylor, Hegel, Cambridge 1975; Isaiah Berlin, „Two Concepts of Liberty“, 1958 — the classic criticism of precisely this figure of „positive freedom“; against it Robert B. Pippin, Hegel’s Practical Philosophy, Cambridge 2008. – In the glossary: freedom, arbitrary will, will, subjective freedom.