That is software rotation done in X server. HW based rotation in kernel is possible but both the 770 hardware and 2.6.16 kernel is a bit different so N8x0 rotation patch needs some (relatively trivial) work. I haven't done it because I'm short of time and find practical usefulness of rotation very low. Also OS2007 and below may not play nicely with rotated display and IMO few people use 2008HE on 770. If someone has no problem building custom 770 kernel, wants to work on the rotation and needs help with 770 hardware or kernel differences, just ask. I'd like to do it in some spare time (next life?).

Yes, this might work (even if slower). Also there may be problem with video playback.

I wonder why people want rotation on 770? Do you need 90 or just 180 degree (because of buttons)? 180 degree only has higher chance to work in OS<=2007.