Just going on what 2defmouze says here, quite possible I'm not understanding something though:
"PSA for Rooted users only:
POINT #1:
If you are rooted and don't know if you have a custom recovery, you probably do, and won't likely be able to install the OTA until you flash the stock recovery. This is very simple to do! The Nexus Toolkit many used to unlock and root has an option to flash just the stock recovery for you. Alternatively, you can grab the stock recovery by unzipping the factory image from Google (see my Factory Image Restore thread) and locating the recovery.img file, then flashing it yourself via fastboot using:
fastboot flash recovery recovery.img
The OTA should install fine now. However..... "
http://forums.androidcentral.com/go...exus-7-adds-landscape-mode-3.html#post2224722