I haven't had time to read this entire thread, but autorotation of the entire UI is a must for me. I champion one handed usage, and with a touchscreen, it is mandatory to have it.

Has anyone looked at Android and how it handles autorotation of the freely placed widgets on its desktops?

I think going forward, since the widgets are freely set, they should have separate placements for landscape and portrait modes, and when rotating, the widgets should animate and move to their new locations with each rotation.

Another is to keep them still and only rotate the content within the widget box, which is a bad idea in my opinion. Keeping the widgets' orientation static as the screen rotates may not suit the content within.