This paper presents the design and performance of a planar 3R robot capable of dexterous constrained manipulation when interacting with a stiff environment. A novel variable stiffness actuator (VSA) having a stiffness ratio of approximately 500 is also described. Variable stiffness actuation, together with a combined position/compliance manipulation path, is used to: 1) allow the robot to passively comply with its environment along kinematically constrained directions despite model error in constraint locations, and 2) generate high stiffness for accurate motion control along kinematically unconstrained directions despite resisting forces. This manipulation strategy provides dexterity for cases in which mechanical work must be performed while complying with constraints. The manipulation strategy and robot performance were evaluated with the task of turning a steel crank to lift a weight. Results show that, when using passive compliance control, the robot completed the task 29 times faster with constraint forces 80% lower than when using traditional active compliance control (with VSAs at their highest stiffness).