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cat <<EOF > test.gp
set terminal epslatex standalone size 8.96cm,6.27cm
set output 'test.tex'
test.ps is upside-down. For other size ratios it works.
Hmm. When I do this here the original output *.dvi displays correctly. It's only after processing with dvips that it gets inverted. Curiously, if I add the -E flag to dvips then no inversion happens. So the strangeness seems to lie in dvips.
Yes '-E' dvips option helps, so maybe adding a hint in the epslatex documentation would be useful.