That's a weird one. I guess all glitches are weird.
So if you bulldoze a lot (or pick a new lot for testing purposes) and then just set an object down on the lot can you rotate it? With no walls to grab does it do anything?
I've tried to replicate the action but no matter what I do, if I grab an object the object remains grabbed and the cursor does not bounce to the walls. I thought maybe you got the cursor out of the menu somehow and maybe it wasn't interacting with the objects but I couldn't get the game to do that action. ..