But it seems that if you are re-encoding the image anyways it is best to just generate it in the "correct" orientation and skip this metadata. Emitting the metadata seems mostly useful if you are trying to avoid re-encoding the image.

Or is there a benefit to generating the thumbnail in the original rotation then preserving the metadata?

Sure, generating the "correct" format would be a good decision. When you change pixel orientation, you'll need to either update or clear the EXIF orientation info to reflect the new pixel data.

Rotation metadata might be helpful in (larger) thumbnails when images are displayed on mobile devices and responsive web pages. Metadata is easy to transfer, at least when scripting with Exiftool or ImageMagick.