The QGraphicsItem.setTransform() function takes a QTransform as its first argument. What's catching you off guard is that a QGraphicsRotation isn't a QTransform! It's in a different hierarchy; it inherits from QGraphicsTransform, which inherits from QObject.
So you can't pass in a QGraphicsRotation to rotate your QGraphicsItem, counterintuitive as that is. You'll have to make a QTransform that does what you want, and use that.
Or - and this is probably a lot easier - use the QGraphicsItem.setRotation() and QGraphicsItem.setTransformOriginPoint() functions to apply your desired transformation without worrying about creating any transformation objects yourself.
Hope that helps!