And by free will and freedom, what i mean is, for example, DH won't let DS into the kitchen because if he goes into the kitchen it means DH has to go our there too and supervise. I'm happy for DS to go into the kitchen when he wants too. I don't want rooms in our home to be forbidden to him and I don't mind going out there with him to supervise. I don't mind him looking through the cupboards but DH doesn't like it.
I agree with your DH on this. Kitchens can be dangerous for toddlers and he shouldn't go there unsupervised.
The only reason he goes in the kitchen is to get something and you need to know what he's going for, so as kitchens and bathrooms are areas where accidents can happen, I would not want a toddler going there without my knowledge, from a safety perspective.
Otherwise on the kitchen your DS will eat lots of chocolate buttons and help himself to stuff from the fridge isn't safe at his age. He could pull something heavy and hurt himself.
I wouldn't say he'll become a bully, but he is spoiled by you and giving in when he cries will just teach him that crying works. It can lead to bratty behaviour and needs to be nipped in the bud.
If he does something wrong, once it's dealt with and he understands what he did and apologises, then it's fine to hug him. Nothing wrong with that.