Augustine is making the classic distinction between nature and grace. Both natural good and supernatural good are ultimately dependent on God, but while natural good can be perfected according to the nature of the subject, supernatural good elevates the subject to a supernatural level of perfection.
Nature, then, is the locus of natural freedom. Freedom can't be considered as an "all options are open" arbitrary free for all (this is a confusion of voluntas with arbitrio). Rather, it is anchored in the dynamic of the person. Persons are conditioned by environment, habit, cupidity, etc. and thus their freedom is defined by a _natural_ tendency toward a perceived (although not necessarily actual) good. Hence this freedom is (indeed sometimes sorely) limited as “some liberty.”
When the Holy Ghost is received through the Word and the Sacraments of the Church (I would add), a supernatural “new man” is wrought in us – Christ. This life in the Spirit is bestowed with a capacity for an entirely different order of freedom – freedom in Christ. “It was for freedom that Christ set us free.” (Gal 5:1) This order corresponds not to the natural, but the divine, the supernatural. The tendency – the “towardness” of this volition is defined not by the natural loves of man, but rather the love of the Son for the Father and the love of the Father for the Son. “Just as the Father has loved me, I have also loved you; abide in my love.” (Jn 15:9)
This infused (by grace), interior tendency of the Son’s love for the Father is concretely manifested by our obedience – “If you keep my commandments, you will abide in my love; just as I have kept my Father’s commandments and abide in his love.” (Jn 15:10) This graced obedience is foremost the putting of things in right order – i.e., with God above all as Lord and Master, “You shall love the Lord your God with all your heart, and with all your soul, and with all your mind.” (Mt 22:37) This love for the Lord (which is a share in the Son’s love for the Father) opens up within us an outpouring of this love, “You shall love your neighbor as yourself,” (Mt 22:39) which essentially desires to share the love which has first been shared with, indeed infused in, us.
This action is characterized not by slavery, for obedience and especially the obedience of love is the opposite of coercion. Rather it bears the mark of freedom in Christ. What is the ultimate expression of Christ’s freedom and love for the Father? The cross. Hence the freedom we are given by Christ is a freedom to suffer, loving God the Father. It is not freedom to justify ourselves, rather it is freedom to die for our love of the Lord only to be resurrected by his gracious love which first raised his only Son.
So is natural liberty a “dubious liberty,” limited in both range and capability? Yes. Are righteousness, justification and the Word beautiful gifts that eclipse the concept of human freedom? Indeed. But these gifts also work within us a new freedom, the Freedom of Christ. This Freedom is not individual in the sense that natural freedom is, but it is a freedom that is bestowed upon the person qua individual. Thus, discard freedom as a shadowy beast? Yes. In the sense that it is useless, indeed harmful, to assert (along with Pelagius) that natural freedom is capable of loving God and the subsequent flourishing of that interior love in righteous acts. But should we discard the mystery of how God moves us interiorly with the grace of the Holy Spirit to cleave freely to Christ, and to obey in freedom with him the Father in suffering and in ultimate joy? To do so would be a denigration of God’s plan.