“It seemed that the servers character was being handles fine and replicated to all clients, but the client only rotated locally.”
That is expected behavior
When on the server, using SetActorRotation will propogate to clients
if you want the client to be able to change the rotation of the server and other clients, you have to run the command on the server, passing in the new rotation from the client
#Control Rotation
Control rotation changes the rotation of the player controller, not the character, so if character is using PC rotation this has an effect.