Yes, conservative advancement can deal with rotations. This is implemented in Bullet, Catch and Fast libraries.
See also papers here:
http://graphics.ewha.ac.kr/catch/
http://graphics.ewha.ac.kr/fast/
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.
Thanks,
Erwin