Hi,
a few minutes ago I used Projection Masterfor the first time in Zbrush 3.5 R3.
(Double sided, Deformation, Normalized turned on).
I can scale and move (for example a simple line) but its not possible to rotate it. The Rotate button is grayed out. If I remember correctly in 3.1 it was possible to use it. I have no idea if Im doing something wrong or if it just doesn`t work (anymore).
Do you have the DragRect selected? you should have Dots or FreeHand strokes you’ll be able to scale/resize/rotate the stroke.
Sorry, my fault. 
Yes, I had the DragRect selected. Thank you very much for the quick reply.