From a post of mine on Apple's support forum:
My image intake workflow starts by importing with Graphic Converter, then renaming withi 'A Better Finder Rename' (rename images to a "date_description_image#"), then review and major edits in GC then import into iPhoto.
A recent release bug in GC, however, forced me to use OS X Image Capture. That's bad news with EXIF auto-rotate and iPhoto.
Image Capture has had a bug for several years -- with my Canon camera it duplicates the EXIF orientation tag when it auto-rotates on import. This confuses iPhoto 5.04 -- iPhoto re-rotates portrait images a second time (interestingly the thumb nail is upright) and so the image ends up rotated 180 degrees. I was sure this bug must have been fixed in Tiger. Wrong.
The malrotation is bad enough, but if one includes these double-tagged images in a batch that's mailed, Mail.App hangs until it finally times out with an AppleEvent error ("mail got an error: apple event timed out". It takes about 15 minutes to time out, during which time one watches the spinning pizza of death.
I fixed my Image Capture mangled images using a Graphic Converter feature that was added a while back on my request. This feature fixes corrupt orientating tags and resets them to the current orientation (so first get the image oriented correctly, then run this).
First I told iPhoto to restore all image to original. Then I did something quite risky (I have backups), I quite iPhoto, deleted the Library root .jpg cache files, then used GC to navigate the images I'd imported in their iPhoto directories. I located all the mangled images, reoriented them, and ran the EXIF repair utility. I then fired up iPhoto. (I tried removing the thumbnails, but iPhoto doesn't regenerate these as one would expect, instead it hangs and eventually shows blank images -- I think this is a cause of the broken thumbnails bug -- iPhoto should just regenerate them.) In cases where the thumbnails were mal-oriented I forced a thumbnail rebuild by editing the image then restoring to Original.
After this fix I was able to mail the images without any trouble.
iPhoto is in such bad shape I wonder if Apple shouldn't do rewrite from the ground up -- maybe an app that would only run in Tiger.