According to the flight instructor, he was conducting an instructional flight in the helicopter and demonstrating low rotor rpm operations from a hover. The helicopter was at a 3 ft hover when he initiated the maneuver, with the student pilot "on the flight controls" following the flight instructor's movements. As the throttle was reduced, the nose of the helicopter began to rotate to the left. The flight instructor pushed the right anti-torque pedal to counter the rotation but the pedal initially felt like it was "blocked." The right skid contacted the taxiway causing the helicopter to bounce and rotate to the right. The flight instructor applied full throttle and collective to attempt to gain altitude; however, the helicopter departed the taxiway, entered an adjacent grass area, and rolled over onto its left side. The helicopter sustained substantial damage to the main rotor and the tail boom. Examination of the flight control system by a Federal Aviation Administration inspector did not reveal any anomalies. In addition, the flight instructor reported there was no preimpact mechanical failures or malfunctions with the helicopter that would have precluded normal operation.