That is due to the internal routines involved in the actual conversion process.
My advice is to flip the image when you're done with editing it, so at conversion back to BLP it would be put as it should.
This is due to the code, TheProphet will not update it any time soon, and a re-write version of W3V ain't gonna come out too soon. I mean, I could do it, but I am not able to program in any C language, as I am specialized on Delphi.
This thread could have been also put in the W3 Editing Tools, I guess... But it'll stay here for the moment...
Cheers