I had a really hard time with this too. Self-defrost definitely is bad for your frozen food because it works by heating the box to just above freezing so the frost can melt. There are some top end "frost free" freezers that supposedly do a better job than manual defrost because they use evaporators to keep moisture out of the cooler box altogether, so that frost never forms. That is supposed to work without raising the temperature. There may be moderately priced models that do the same thing--I don't have enough knowledge.

Before buying, however, I'd check carefully into how the freezer actually works. Don't rely on the name "frost free". I don't think it's trademarked or anything, so it's up to the manufacturer to decide what it means. I'm keeping my manual defrost, coil shelves freezer for heavy duty storage, though I got a built in Miele frost free for my new kitchen. It hasn't been long enough to say how it does, but so far it seems fine, including on a poorly wrapped loaf of bread that was only frozen for a few weeks--not a great test case, but this kind of bread doesn't much like being frozen.

If you can't find a freezer you think will be really reliable for your purposes it's definitely worth forgoing the rebate, rather than wasting the food.

The storage space of the freezer is not intended to raise above freezing during defrost. The heating source is concentrated at the cooling coil behind the interior rear wall.

So Dadoes, does this mean that the frost free won't harm the food?

The frost-free environment does tend to promote freezer burn on food that isn't wrapped properly ... which is more of a side effect of the continual defrosting process. Frost is moisture collected on the evaporator coils from the air inside the freezing compartment, along with moisture in the room air that enters when the door is opened. The automatic defrosting process melts the frost and drains it away on a regular basis, resulting in a very low-humidity environment in the freezer, which in turn can pull moisture from loosely-wrapped items or items stored for a lengthy time.

I wish I knew why Energy Star didn't rate passive freezers or why it seems that way. Look at real consumption anyway. Energy Star as it is today is not a very consistent rating program. They have some arbitrary category boundaries and suddenly you get a rating even though it consumes a whole lot more than another one in the next category... Post your question on applianceadvisor.com about freezers and ratings.