Tony,
Clearly I can't argue, I would fully expect iTunes to do the right thing and read the exif tag.

So, now that you've identified that iT sucks for what you want, what's the quickie workaround? Batch process in irfan I suppose. However if you're the curious type, I would suggest the following:

We can deduce that:
1) iTunes reads an exif tag for orientation (that's the only place in jpeg for this data), but it's not the tag your camera writes.

2) If it is not reading the tag it is either because a) it's reading another tag or b) the tag contents or format written by your camera aren't handled by iTunes.

3) A side by side exif comparison of an Irfan processed and unprocessed file should yield the difference.

4) If not, then go have a taco and a beer and worry about something more fun.

-Zeke