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If I grab a corner handle on an image inserted into the latest version of web builder, I get a resized image which maintains the aspect ratio - which is what I want. But if I rotate the image, non of the handles maintain the aspect ratio. Is this a bug? Appreciate help on this.

When the image is rotated, then the resize handles no longer maintain the aspect ratio because the image is transformed.
This is behavior by design

Also, note that this has always been this way, not related to the latest version.

Thanks for your reply. I don't understand your answer though. Why shouldn't I want to retain the aspect ratio just because I need to rotate it? This is making my layout difficult.

I'm sorry, it is not possible to maintain the aspect ratio when an object is rotated.

I don't understand your answer though.

When you rotate a image then the height & width dimensions (bounding box) changes, it then results in empty space around it. This inturns makes the overall size larger so its original aspect ratio is lost. You can try the following AI Stable Diffusion or Figma to lock aspect ratio of a image and then bring into the software.

I use my image editing softwear program to do the resizing then import it to my page. You can even do your desired rotating there and import the image to the page. This way you are not relying on WYS to do this.