They are 100% restricted on the settings. Each location has specific settings that are used in the camera for that location at that time of day with that particular weather at that time. The PhotoPass photographers are required to set their camera body with those specific settings when they get their assignment of where they will be. Period.
This is done because all of the photos are immediately transmitted off to a central QA team for proofing, but it is expected that a high percentage can be post-processed with standard presets. Controlling the specific settings allows Disney to ensure the highest likelihood of capturing a photo that meets their quality expectations.
Their ability to express any sort of creativity is sometimes limited as well. As I mentioned previously, the photographer outside of HS was shooting from a tripod. Fixed location, fixed perspective, fixed height, etc. He was not allowed to move the tripod or remove the camera from it for the Disney photos he was taking. Using a visitor's equipment is totally different and partially why he enjoyed shooting with my camera - he moved around, adjusted the zoom, etc. He didn't tinker with settings, but definitely got out some pent up frustration to express his more creative side.
Additionally, the cameras run a custom version of firmware and not the stock firmware that's available to us as consumers.