I just figured this out today.

The way that Stretch actions interact with Rotation actions in dynamic blocks has been escaping my office for the past few months. We had several blocks with stretch actions. The big problem was they needed to be rotated as well. When the Rotation action was added all objects in the block were selected. you would think to have the stretch action rotate with the block it would need to be selected. The opposite is true. If you want your Stretch action to work properly after you rotate the block you should not include it. The parameter for the stretch action should be included, but not the Lightening bolt icon. This insures that the grips for the stretch action are rotated when the block is rotated and will continue to stretch the associated objects properly. we use AutoCAD 2008.

I hope this helps