How does Schlegel distinguish between Romantic and Classic?

As an arch-Romantic, August Schlegel attacked the prevailing school of Neo-classicism on a number of grounds. For one thing, it was devoted to an aesthetic of mimesis, that is to say, it held that art should represent and reflect the objective world instead of expressing the inner state of the individual artist. Schlegel also argued that Neo-classicism was overly dependent on formal rules, ignoring the spontaneity which he, and other Romantics, fervently believed was an essential element in the creation of truly original works of art.
To Schlegel, the formal rules of composition so beloved of the Neo-classicists were stifling and restrictive, treating works of art as machines that needed to be constructed according to a precise blueprint. As an alternative, Schlegel advanced the notion that a work of art was more like an organism, developing according to its own inner logic of growth. Schlegel held up Shakespeare as a forerunner of the new Romantic paradigm. Neo-classical critics had often castigated Shakespeare for his lack of fidelity to the venerable rules and conventions of drama, such as those devised by Aristotle. Yet Schlegel commended Shakespeare for his spontaneity, his imagination, and for creating his own rules, all the key elements that, in his eyes, distinguished a Romantic work of art from a Neo-classical one.