Ok, after taking a look at the file you sent me via email and tinkering with my Inventory mod, it looks like this is the situation...
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The technical stuff:
If I put a second "auto-bag" element in the paperdoll area, you will no longer be able to mouse-grab the paperdoll and rotate it. Additionally, any subsequent auto-bag elements are rendered useless (and removing them would prompt a rearrangement of the elements in the bottom portion of the window to make better use of the space).
I tried adding the "DragAccepts" attribute with the value "icon" to the paperdoll and leaving the original auto-bag element in place, but that alone won't allow the paperdoll to accept drag-and-drop items. Looks like the auto-bag function is tied to the element named "AutoInventory" exclusively. Changing the new auto-bag element to include the "Type" element with the value "PaperDoll" doesn't work either.
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In a nutshell:
"AutoInventory" can't look like a paperdoll, and "PaperDoll" can't act like an auto-bag. Overlaying the two results in one or the other becoming non-functional, depending on which element is on top.
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It's a good idea, and it would be something I'd love to implement, but because of the way the various elements behave and receive their information from the game server, it's not something I'll be adding. I'm just not prepared to lose the ability to twirl my paperdoll, especially after having recently added in the vertical-position and zoom controls.
I'd be THRILLED if another modder could prove me wrong, though, and suggest a way to have our proverbial cake and eat it too.