I think maybe it's not so much freeing the house elves as creating a better working situation for them. Requiring masters to not be abusive, decent living quarters and time off to visit family and friends. After they've adjusted to this change in the way that they are treated I think they may begin to see that there is more to life than slavery. Give them a taste of freedom while they are still slaves, then they won't be as frightened of it when they are given the option of being free.

The Ministry would have to pass a law to make sure that "house-elf rights" are followed. I think masters would be less hostile to changing living conditions as long as it didn't mean they'd lose their servants. Those who already treated their house-elves well wouldn't need to worry about the law.

Whitestar//Ravenclaw