The whole point of cursor mode in the housing editor is to make fine adjustments possible.
The Problem
When the camera's angle gets too close to horizontal it can be impossible to grab and rotate the blue (vertical) axis. Plus, when it's that tight, fine adjustments are actually impossible because the slightest mouse movement produces large jumps instead of the fine adjustments intended. This happens frequently, particularly when you position the camera to see what you're doing with large objects whose grab-handles are far away from the camera.
Suggestion
Eliminate "cursor mode" in the housing editor, freeing up that 1 key-bind. Use that key-bind to toggle a new "slow mode" on/off. While "slow mode" is ON, the normal 6 rotation key-binds operate at 1/100 normal speed, or whatever would produce the graphic engine's minimum angle change.
Extra Credit
When "slow mode" is ON, slow down the mouse as well, although probably at a more reasonable rate of 1/20 of normal.