You're reorienting the UV's in world space, but the material is reading it as tangent space. Simply input your normal map texture2d into a Vector Transform node set to Source:World and Destination:Tangent. I just tested this with the default UDK template map cube meshes and this fixes it. Also a side note, I suggest…
This might be a strange one. We've just noticed at work that on world aligned materials (which we're using for mesh ground tiles) when a mesh gets rotated the direction of the normals seems to rotate with it. To illustrate the problem, this is one plane duplicated four times and each rotated 90 degrees. The seam is the…
Note that I've not tested this to see if it fixes baked lighting/specular (probably not). As long as you're only dynamic lighting these pieces then this is your fix. I'll look into the baked specular/lightmap stuff this week if I can make the time.