So you're saying this is not a bug?
It is the intended behaviour, like TD explained. Not all applications interpret the autorotate flags and other flags correctly, so iPhoto creates a preview for the Media browser and lets the original untouched. The rotated preview cannot double as the original, because it has been subject to a lossy JPEG compression.
looks like cleanmymac2 is not welcomed? I thought it removes old cache, pref files, etc that are not being used
We have seen quite a few problems caused by excessive cleaning. Caches are created to speed up performance. If you empty them to save space, you slow down your mac, because it needs to recreate the cached data every time the application launches. And some caches must not be cleaned. Many of the questions related to "Videos don't play" are caused by cleaning apps emptying a cache, that is only created when the system is installed.
I tested CleanMyMac2 on a test library, when it first came out. At that time, it would replace the original image files by the previews of the edited versions. The consequence was, that the originals suffered a loss of quality due to the additional JPEG compression, and it was impossible to revert the edited images to the original state. Worse, it was implemented buggy. If a photo had several edited versions, the other edited versions were replaced by the same version - the original lost as well as the edits. That is why I recommend not to use it on an iPhoto Library. Don't use cleaning apps and let them touch files, where you do not know, how they are used. MacOS X has automatic housekeeping tools, that are running regularly and cleaning caches, rotating log files, etc. A Mac does not get dirty. Have you seen this article? Worth reading:
http://www.thesafemac.com/the-myth-of-the-dirty-mac/