Yes, I'd expect that. If iPhoto is interpreting the Exif data, and it also has a synch-to-iPhone option built in (instead of needing to run iTunes separately like us windows folks do), then yeah, I could see how it would be able to handle that transparently.

It's too bad the "Adobe Albums" thing didn't work in terms of rotation. Because it seemed like it would solve my other problem quite nicely. It would let me drag any photos I liked into albums, while leaving the original photo files alone. Adding the extra step of running iTunes to perform the final synch wouldn't have been a big deal.