Yes, conservative advancement can deal with rotations. This is implemented in Bullet, Catch and Fast libraries.
See also papers here:
http://www.continuousphysics.com/Bullet ... ection.pdf
As mentioned before, it is best to allow a user-definable 'allowed penetration', to deal with (close) contact situations.
It is on my long todo list to add some Bullet demo that shows how to its continuous collision detection check.