I have verified the xorg packages in xenial-proposed on some laptop with
NVIDIA Graphics and it does fix the problem.

** Tags removed: verification-needed-xenial
** Tags added: verification-done-xenial

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https://bugs.launchpad.net/bugs/1706287

Title:
  Please drop debian/patches/disable-rotation-transform-gpuscreens.patch
  of xorg-server

Status in xorg-server package in Ubuntu:
  Fix Released
Status in xorg-server source package in Xenial:
  Fix Committed

Bug description:
  [Impact]
  Display rotation does not work when the NVIDIA driver is used. This is caused 
by a distro patch to xserver which disables it, because the NVIDIA driver had 
issues in the past.

  NVIDIA Graphics driver 375.66 has supported the rotation since Ubuntu
  16.04.

  [Test case]
  Install nvidia blob, try to rotate with xrandr or the display capplet.

  [Regression potential]
  No other distro shipped with such a patch, so there should be minimal risk of 
regressing anything.

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