Not only is it "pretty similar to compulsion"; it's the exact sort of compulsion that we complain of in human tyrants. The problem with Hitler or Stalin or whoever isn't that they somehow make their citizens literally unable to choose for themselves; it's that they hit them with terrible punishments when they choose the "wrong" way.

The kind of tyranny God allegedly refrains from exercising is precisely the kind that no human tyrant has ever had the option of exercising.

(Though that might change, and plenty of people have worried about the possibility -- see e.g. Nineteen Eighty-Four or Brave New World. For that matter, IIRC the paragraph quoted above is in the context of Lewis worrying about human tyrannies with the ability to mess with their subjects' minds.)

I think Lewis's actual response would not be the one VoiceOfRa gives; rather, I think he would say that God doesn't really send people to hell, he merely permits them to send themselves there, and that the awfulness of hell is not a matter of devils with pitchforks or lakes of molten sulphur but of the inhabitants of hell -- who have selected themselves by their refusal to align themselves with God who is the source of all goodness -- living out the freedom-from-God on which they have insisted.

I should add that I think that's also a pretty hopeless response, though less obviously hopeless (to me) than the one VoiceOfRa suggests. (But also that it's some time since I read much Lewis and my mental model of him may be less than perfectly accurate; perhaps he could give a better account of his position than I have sketched above.)