Kubelet can't rotate the container logs because Docker doesn't support being asked to reopen the log files, from what I can tell.
Also, as far as I can tell, Docker doesn't rotate the container logs because RKE configures it with the json-file driver and doesn't provide rotation options (default there is no rotation).
There doesn't appear to be a RKE cluster yaml field that allows for providing daemon options to Docker in order to configure the json-file logging driver to rotate.