how to rotate a thumbnail

I'm not 100% sure what you're asking, and apologies if I misunderstood.

I have plenty of shots taken on a phone that need rotating 90 degrees to look right.

What I have found works is not to try and rotate in FCP but to do it in the finder.

Select the clip in finder (I use column view) and press Command and either L or R. This will rotate the clip 90 degrees left or right and that's how it will be imported to FCP.

I remember some apps getting orientation confused a while back, like if you held your iPhone horizontally one way, Quicktime would play it upside down and PC's would play it upside down. There' a flag or metadata for orientation I think.

I wonder if deleting and regenerating the thumbnail cache would help. I don't see anything clearly related to orientation in a thumbnail's info.plist but I'm not super familiar with it. There is a "<key>FFSegmentStorePixelTransformArray</key>" which may have something to do with it.

Are the clips themselves vertical or are they rotated in the timeline?

FCP thumbnails are supposed to match the clips before any changes are applied. So if the clips are vertical and the project is vertical, so are the thumbnails...

What are the clip dimensions - are they vertical, like 1080x1920, or are they horizontal, like 1920x1080?

Was the clip rotated in the timeline?

And, although this one should not make a difference, is the project in a vertical aspect ratio?

You're welcome! Happy it's working for you.