Hi Tilt, I did say I was playing devil's advocate above. I think it's a very tricky thing to think about. I think.
Here are some comments from Ajahn Punnadhammohttp://bhikkhublog.blogspot.com/2008/04/free-will.html
As for Buddhism and free-will, the question allows of at least three answers, at different levels. In the first place, it should be pointed out that the question itself is something of a category error. The free will vs. determinism debate comes out of western philosophy, not eastern. In it's original form it wrestled with the problem of how free-will could be reconciled with an omnipotent and omniscient deity. If God knew from the creation that I would choose coffee and not tea, is my choice really free? When western thought moved from theism to materialism it took the problem with it, only with blind electro-chemical processes replacing the big guy in the clouds. Since Buddhism isn't encumbered by either the theist or materialist axioms, it isn't bothered by the question in the same way.
On a second level, and in a slightly different form, the question does come up though. The Buddha opposed the hard determinism of Makkhali Gosala with his little ball of yarn. (He would demonstrate his theory that everything was fixed from beginingless time by unrolling a ball of yarn, teaching that beings moved through various rebirths in a fixed order from beginning to end like the unrolling yarn.)
Furthermore, the Buddha said it was an error to teach that all things are determined by karma. This flat statement has been interpreted in various ways. However, in my humble opinion, the statement was made specifically to allow for a kind of free-will. You won't find it laid out so neatly in the Suttanta, but in Abhidhamma it is made clear that in the sequence of conscious mind-moments the sensory awareness of sights, sounds and so forth is determined completely by various factors, including past karma. However, there are other mind-moments (javana) where we make karma, and there the possibility of choice is present.
So, by this Abhidhamma analysis we could say that the present moment experience is always absolutely determined, but that the volitional action we take in response is free. Technically, it involves the factor of cetana or volition. This raises a further philosophical difficulty however. The dependent origination teaches us that everything except for the supramundane Nibbana element arises from past causes. So that would include cetana, so how can our choice be truly free?
The answer is the third level answer, which comes around at a higher level to the first approach. The false assumption still remaining in the previous paragraph is that there is an I who chooses coffee over tea. With the insight of anatta or not-self we dispense with the whole problem of whether a person is free by dispensing with the person. There is only the interplay of various physical and mental factors, one of which is cetana.
These various complexities were wrestled with in Buddhist India, and it may be that the Mahayana concept of the Tathagatagarbha ( the seed-of-buddhahood said to be present in all sentient beings from beginingless time) may have been an attempt to answer one particularly knotty form of this dilemma; how is it that beings who have always wandered in samsara, with only samsaric mental content, could ever develop a volition for seeking the transcendental?