This is a know limitation.
A "fix" would be non-trivial. Currently whenever an interactive entity is painted, it also registers an active rectangle on screen (using Game->m_Renderer->m_RectList.Add()). When the mouse-over is tested, it first checks what active rectangle is under the mouse pointer, and if it's a sprite, it calculates the pixel in it's texture to see if it's transparent (see CBRenderer::GetObjectAt()). To properly handle rotations, the active rectangle would need to store the rotation, then later when the mouse-over is evaluated, you'd need to apply a reverse rotation to get the proper texture coordinate.
The 2D engine in
WME2 does it properly, but it's quite different from WME1 code, so it probably won't help you much.