"iPhone" and "edit" in the same post.
After you rotate the clip, use Scale (also found under Motion) to alter the size of the clip, and fit it into your sequence. You can either stretch it to fit, by disabling the Uniform Scale checkbox, or just decrease the clips size until you see its full height. You'll have a lot of black emptiness on top and bottom, in that case.
You can't rotate the "entire frame," since a sequence's dimensions are fixed. You have to edit in two different sequences if you really need that.
Huge help, thanks.
I don't have a problem creating two different sequences using the different
clips if I can combine them later on...
What is quick version of editing the second clip in another sequence to get