Everything in moderation.  I have worked with too many teens and young adults who have developed eating disorders.  Some came from homes that restricted food for one reason or another.  Healthy kids tend to come from a home that observes good balanced diets, ability to make choices and promotion of daily exercise.  Also, for children who wish to make some personal choices, such as becoming a vegetarian, it is important to have parent support and supervision to make sure that meals are full of nutrition vs. fats or carbs.
 
Also, making meal times an experience is a good idea.  If a child does not like vegetables encourage him/her by making them part of the process. Have them shop for food items, prepare dinner and cook with your supervision.  If they are young give them two healthy choices (e.g. "Tonight we can carrots or broccoli, which would you like?")
 
Make dinner time fun!  When growing up we never knew what to expect for our dinner "lesson" one night a week.  We could walk in to a French Bistro where French was taught or a Taco night with Spanish lessons, too!  Oral family history could have been shared when an old family recipe was used.  Game night was popular during long winter evenings when hot soups and breads were served. New recipes were cut out of newspapers.  And friends were encouraged to join in the family fun, so that our parents had more supervision over our activities.
 
Good luck and I hope you find a happy balance!
 
Louise Masin Sattler, NCSP
Nationally Certified School Psychologist
Owner of Signing Families
http://www.SigningFamilies.com

This is a topic I think about a lot, as both a mother of an active, healthy, yet low-weight child, and as someone whose parent had an eating disorder.
 
I remember once being forced to eat cooked peas for dinner. I very reluctantly (and with verbal protest) did as I was told, but immediately afterward vomited the peas (on the kitchen table) and hate them to this day. I also remember as a child regularly sneaking over to a friend's house to raid her junk food pantry, because my parents wouldn't let my brother and I eat sugar cereals, sodas and certain types of chips (ironically, or perhaps hypocritically, our lunch box often contained bologna sandwiches on white bread with tons of mayo, as well as Twinkies and those pink coconut-covered marshmallow balls!).
 
Now that I'm a parent, I do not force my child to eat certain food items, nor am I an absolutist on healthy food choices. I do allow fruit juices, some sugary treats and even an occasional soda or fast food indulgence. But I mostly focus on and provide multiple healthy options, and do not allow dessert or rewards like ice cream until enough healthy food is eaten first.
 
I also haven't been strict about "This is what we're having for dinner -- if you don't like it, too bad for you." Instead I offer her alternative choices if she doesn't like what we're having, within reason. I'm not going to cook a steak if we're having chicken, but if there's a quick and easy alternative like spaghetti or Campbell's Dora the Explorer chicken soup (one of her favorites), I will make that extra dish. As she's gotten older (she's now 7), I've noticed that more often she is choosing to eat what her father and I are having (be it curried vegetables over rice, or BBQ beef ribs and seasoned corn cob). Her previous picky eating habits are (for the most part) passing, and she now often requests salads, fruits, homegrown veggies, and other healthy items.
 
However, there is one restriction in our daughter's diet: due to her father's (and by extension, our family's) religion, she isn't allowed to eat pork. This hasn't been a problem at home, but can be a challenge (or disappointment for her) in public settings where other kids are eating pork or foods with pork ingredients. To address this limitation and reduce her frustration, I do my best to make sure she has substitutes available, like soy-based or turkey hot dogs and bacon, or vegetarian marshmallows (for campfire roasting -- many standard marshmallows contain pork-based gelatin; http://en.wikipedia.org/wiki/Gelatin).
 
Thankfully, our daughter doesn't have food allergies, and doesn't battle obesity or being overweight, like so many other American children nowadays. Instead, she's on the opposite side of the spectrum: very skinny and tall. At her most recent checkup (last week), her lifelong pediatrician said she's physically and emotionally healthy, and not to worry.
 
So, overall, for a variety of reasons, our approach to our child's diet falls in the "something in between" category you referenced. Unhealthy choices aren't completely 'forbidden fruit', and we balance with emphasizing and guiding our daughter in healthy eating. Thanks for asking this question!