Ah, I had this problem too. The trouble is that you're checking the rotation in an enterfame, so it'll be called all the time even for the smallest adjustments, result = jittery.
I found a solution with this - http://www.gotoandplay.it/_articles/2003/07/jump_and_run.php .
He's using a different way to conventional hitTest with points but the main code's very simple to redo.
The main rotation lines of code are:
mario.t_rot = Math.atan2 ( dy , dx ) * 180 / Math.PI;
mario._rotation += ( mario.t_rot - mario._rotation ) /4;
Substitute the lines he's using to collide with for the 2 points you rotate between, and it could easily turn into something like
character.temporaryrotation = Math.atan2(point1._y-point2._y, point1._x-point2._x) *180 / Math.PI;
This will of course get the angle to rotate to, in the temporaryrotation variable.
Next up will be
character._rotation += ( character.temporaryrotation - character._rotation ) /4;
Here finds the difference between the character's previous rotation and its current rotation, and makes it go between the 2 with a delay of 4.
I hope this helps.