@ninjacolin “If you don’t have free will, you don’t have free will” is a tautology, but an irrelevant one. According to the compatibilist, we do have free will. What the compatibilist argues is that incompatibilists have a mistaken definition of free will. They build too much into the concept. In the original question, you are clear about which type of free will you are asking. But you also misrepresent determinists as rejecting free will altogether. They don’t. Hard determinists do, but they aren’t the only determinists in the world.
As for compatibilism being a “diplomatic cop out,” I strongly disagree. For one, compatibilism is hardly diplomatic. Compatibilists take aim at both sides of the debate (incompatibilist determinists and incompatibilist libertarians), saying that neither understands the issue properly. Moreover, it causes a great amount of rudeness (e.g., when it leads people to decry the view as a “cop out”).
For another, it is not a “cop out” at all, but rather the more historically informed view. There is a long philosophical tradition of distinguishing between two different types of free will: liberty of spontaneity (the power to act in accordance with one’s desires or choices without constraints, even if our desires and choices are themselves determined) and liberty of indifference (the ability to have done otherwise in the exact same circumstances). This tradition has always called both “free will” and concerned itself with what entities had which kinds, if any. There was a long debate between the Scholastics, for instance, about whether or not God could have liberty of indifference if He always had to do what is most perfect.
We can set aside the more academic debate about God and focus solely on the distinction. Compatibilists—qua compatibilists—don’t need to make any metaphysical assertions at all. Instead, they need only to say that liberty of spontaneity would be sufficient for free will if we had it. Incompatibilists, of both the determinist and libertarian varieties, say that liberty of spontaneity is not sufficient for free will and that we would need to have liberty of indifference to be properly called free.
Note first that this means that compatibilists are not, as you say, “determinists who want to allow libertarians to hear their favorite term, ‘free,’ somewhere in the explanation of reality.” For they need not be determinists at all. Compatibilism is a claim about the consistency of two concepts, not about which of those concepts might obtain in reality. While the majority of compatibilists are determinists (making them “soft determinists,” as opposed to the so-called “hard determinism” of those who who are determinists and incompatibilists), it is not necessary that one be a determinist to be a compatibilist.
Now, it is a very interesting issue whether or not liberty of spontaneity is a legitimate enough notion of free will for the compatibilist’s claim to be borne out. Certainly, the long tradition of understanding it as a form of free will (even if not the form most desired by some philosophers) provides some reason for thinking it is. Our standard linguistic practices also suggest this. We find ourselves meaningfully less free when mentally ill or when physically threatened (say, with a gun against our head). In both cases, it is common to hear people say that someone “didn’t really have a choice” as if the lack of these constraints was meaningful for free will. Legal systems tend to reflect this as well, which is why one can be declared not guilty by reason of mental defect (e.g., when a schizophrenic breaks the law during the course of a break from reality) or why we may be exempt from penalties when acting on the orders of someone threatening our lives (e.g., if a would-be robber forced you to be the one who actually broke a window or took something from a display case while holding a gun to your head).
Yet there is also the separate issue of whether or not we even have liberty of spontaneity. It might seem obvious that we must at least have that. Even if our choices are themselves determined, it seems they must be part of the causal chain that leads to our actions. If it turned out, however, that our mental states were entirely epiphenomenal—and thus an entirely causally inert product of the world—then it would follow that we do not have liberty of spontaneity. If that were the case, I think it would have to be conceded that we did not have any sort of free will whatsoever.