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> IMO EXIF rotation should be applied always, and any CSS rotations should combine with it, not override.

I agree. EXIF rotation is a part of the image and it's just an implementation detail of the image data. Browsers shouldn't leak this.

Presumably the issue is "Given that browsers that ignore EXIF rotation already exist, should modern browsers display the same page differently?"

Yes because it will fix more pages than it will break.

But what about the compatibility, graceful degradation, etc. of the browsers that yet don't support this feature? Won't that break everything else?