Yes, this is true. If you want to perform plane stress (or axisymmetric) analysis, the elements must lie in the global X-Y plane. See "Assumptions and Restrictions" in the element reference you're using (plane42/82?). It is possible to rotate your model with geometry attached. Just remember that you have a hierarchy in your solid and finite element model. Your elements and nodes are attached to your geometry at points in which you have specified amesh, lmesh, etc. Hence, you must rotate the lowest part in the geometric hierarchy, and everything else with follow. Try rotating keypoints first (I don't think this will work, but try anyway), then try rotating lines and finally areas. Make sure you backup before you do this etc.
Cheers,
-- drej --