So what is the rationale for maintaining this policy? Doesn't it have any internal opposition to being hypocritical?
Of course it has opposition - both Austria and Switzerland are democracies, after all. Other answers have outlined the historic reasons for how the current positions have formed. As for current political discussions in Austria, all you have to do is to go back to the campaigns for the recent presidential elections to find calls for immediately dropping the sanctions. These positions are somewhat popular, mostly among voters of the right wing parties and their candidates. The far-right party FPÖ also opposes financial support for Ukraine, claiming that this is effectively just a subsidy for US arms manufacturers.
On the other hand, there are also voices stating that neutrality is outdated and should be dropped, as Austria is are surrounded by NATO members anyway, and already cooperates with them on multiple levels. This is currently not a popular opinion, however. E.g. the party NEOS wants a stronger "EU Army" and Austria to join that (2019, derStandard, in German): Neos fordern EU-Armee statt Neutralität, but there was limited interest from EU NATO members for that idea.
The current government of Austria is a coalition of the ÖVP (conservative, traditionally center-right) and Green party. Their positons certainly also differ, with the greens usually taking a pacifist stance, while the ÖVP position is less clear. Towards the end of the 1990s, for example Wolfgang Schüssel, then foreign minister (and later chancellor) publically discussed potential ways for closer integration with NATO, but the party has since officially abandoned this idea.
One example of public discussions on Neutrality in Austria (March 2022, derStandard, in German): ÖVP stellt Neutralität zur Diskussion.
The official government position is a compromise.