This is something that seems to be constantly discussed with a lot of intellectualizing being thrown back and forth.
The first time I ever got my legs strong I did no free weights besides lunges -- hack machine squats, leg press, hamstring curls, back extensions.
Now I've been mainly squatting, deadlifting (or a variation thereof) and lunging for leg strength. Even though I've added a ton of weight to my lifts and I have strong legs again-- there isn't anything magical about it vs. lifting on the machines. I don't have some kind of special strength that I didn't have before. In fact it was much less convenient to do it this way because of all the form issues I had to worry about.
I bring this up mainly because of all the MMA talk lately -- people saying the pro's are idiots because they are working on machines. I just don't see what the magical difference is -- resistance is resistance, hard work is hard work.