For a discussion like this, flashbacks should be distinguished from cutscenes. The latter are a simpler idea, a way to explore a tangent or subplot. Flashbacks on the other hand are more complex, for the reasons you noted-- on the one hand one hopes to allow the player some sense of participation, while on the other hand guiding the player-character through an inevitable sequence (inevitable because, on a timeline, the events have already occurred and cannot be altered).
A game which handled flashbacks fairly well was Color the Truth from this year’s IF Comp. On the other hand, a game which offered inadequate flashback use was Act of Misdirection.
One important difference in these games’ use of flashback is that in Color the Truth, the player is beforehand given a rather clear idea regarding what probably needs to be accomplished during the flashback, while in most scenes of Act of Misdirection the player has no reasonable basis upon which to even speculate what either the goals or motivations of the player-character ought be.
To be effective, I think a flashback scene should separate the gameplay purpose of the scene from the mechanics of navigating through the scene. If the purpose of the flashback is elucidate characterization, then the plot of the scene should be crystal clear. If on the other hand the flashback is meant to explore some plot developments, the motivations and knowledge of the player-character should be readily available to the player. That many authors who attempt to use flashbacks fail to note this distinction is in my view one of the main reasons flashbacks (as an experience) are usually frustrating, leading us to believe flashbacks as a technique should generally be avoided.