Am I totally missing something or is it impossible to change the status from busy to free in the new calendar?
Nope - you're right. I haven't been able to find it either and there are many instances of similar comments (complaints?) in various blogs.
This is a feature that I used often to block out some time but to show it still available. For example, there's a repairman due at my house today between 12-5 PM so I need to note that in Calendar but still have calls and other scheduled items that occur between those hours.
If anyone from Apple is monitoring these forums
PUT IT BACK!