There is something strange going on with rotating rotated nodes, which may well be the gimbal lock problem.
Video trying to explain gimbal lock, which still doesn´t seem to explain "why" it occurs (or does it?):- http://www.ogre3d.org/tikiwiki/-Gimbal+Lock
I´ll post an update to this, or maybe it should be deleted as it seems its not a bug.
Steps to reproduce this issue:-
1. Create a cube node.
2. Set rotation to 0, -90, 0.
3. Now rotate 45 degrees on the X axis SetRotation( 45, -90, 0) - object rotates correctly.
4. Now rotate 45 degrees on the Y axis SetRotation( 0, -90 + 45, 0) - object rotates correctly.
5. Now rotate 45 degrees on the Z axis SetRotation( 0, -90, 45) - object does NOT rotate correctly, instead it rotates backwards on the X axis! I.e. it makes the same axis rotation as step 3 but reversed!
Only rotation of the Z axis works as expected with subsequent additive rotations.
Calling UpdateAbsolutePosition does not resolve this.
This must be a known issue with workaround, but couldn´t fine it.