It’s not so clear, as puzzleannie asserts, that the religious liberty declared by *Dignitatis Humanae *was how the concept was understood before Vatican II - but it’s also not so clear that it wasn’t. The problem is that we have different ways of articulating theories in different situations and with different emphases.
One of the biggest problems preventing an understanding of Vatican II in continuity with tradition is that many people import contemporary American conceptions of religious freedom into Vatican II. Many think it says that everyone is free to believe what they think is true and to act on that, provided it does not cause physical harm to someone else’s person or property. Thus, the state should remain neutral towards religions until such time as it must intervene for safety’s sake/public order.
If you look at the first few paragraphs of Dignitatis Humanae, though, you’ll find that it re-articulates the traditional duties of both individuals and societies towards the true religion (Catholicism). No one has a right to believe something other than/contrary to the Catholic faith because no one has a right to do wrong. Rights exist only for the good. The religious liberty declared by the council, then, is not the right to believe what one wants but the right not to be coerced in religious matter within three reasonable limitations. These are safeguarding 1) the rights of all, 2) public peace, and 3) public morality.
So how does all that play out? First of all, societies still have a moral duty to recognize and promote the true religion. This does not have to be done through official or constitutional channels, so those who claim that countries who removed official preference for Catholicism from the constitutions have betrayed Catholic tradition are simply wrong. It does mean, though, that it is perfecly legitimate for there to be legal or constitutional preference for Catholicism, and at any rate the society as a whole is bound to strive to instantiate Catholicism in their communities as best as can be done (while respecting in turn the freedom of individuals from coercion in religious matters). The public morality clause is probably the biggest remaining question mark of the whole declaration, as it is that clause that places it in strongest continuity with the past but that is ambiguous enough not to tell us precisely where the limits of state intervention lie.
Paul VI, for instance, exhorted world leaders to make/keep contraception illegal (in Humanae Vitae). Remember, this is the pope who signed Dignitatis Humanae, and here he is saying that two adults who both freely consent to this particular, otherwise immediately victimless, sin should be liable to legal sanction. But what are the limits? St. Robert Bellarmine, defending the classical Catholic position that heretics could be punished even with death, argued that one of the biggest problems with heretics was that, unlike those who are honest about belonging to a different religion entirely, heretics are like counterfeiters who try to pass off their own beliefs as true Christianity. The rationale for punishment was not that they believed the wrong thing or that they worshiped the wrong way, rather it was that in their public activity they tried to pass off their false beliefs as real Christianity. I wonder if that line of reasoning doesn’t fall under the protection of public morality, for as Paul VI declared governments still have the right and duty (insofar as possible) to uphold the natural law - counterfeiting is certainly against the natural law, and has more of a victim than illicit sex between consenting partners. So where do we draw the lines?
The answer is that we simply don’t know yet. Modern popes have been clear in their support for religious liberty, but they are also speaking to a specific context, especially one in which most people are now fully aware that, say, Catholicism and Lutheranism are two separate, incompatible belief systems. We need some serious theological work, nevertheless, to make clear for all of us just what the lines of continuity are between “heresy has no rights” and “heretics are subject to legal penalties” to “everyone should be free to worship in public and present their beliefs openly.” There does appear to be a strong continuity, but it’s limits are ill-defined and its ramifications have never been examined apart from modern misconceptions of “separation of Church and State.”