The theory of plasma blobs is extended to treat the stability of "non-thermalized" blobs, which have both density and temperature higher than the surrounding plasma and can transport heat as well as particles. It is shown that the internal blob temperature profile T e (r) can drive azimuthal rotation v θ (r) about the blob axis, which produces a robust m = 2 rotational instability in the interchange limit (k || = 0), similar to those considered earlier for rotating theta pinch and mirror plasmas. The instability includes the effects of the centrifugal and Coriolis forces, the sheared velocity v θ (r), and the axial sheath boundary condition. In some parameter regimes, the growth rate can be large (γτ c >> 1, where τ c is a typical blob radial convection time), and the rotational instability can play a role in determining the blob size distribution and radial transport. Rotation is expected to play a role in the evolution of blobs created by Edge Localized Modes (ELMs). Numerical calculations show that finite-Larmor-radius stabilization is ineffective for comparable ion and electron temperatures, but the sheath conductivity can be strongly stabilizing for reasonable parameters. A separate branch of temperaturegradient-driven sheath instabilities, predicted in the eikonal limit, is not observed for low mode numbers.