if the rest of the universe were treated as rotating, that would send gravitaitonal waves that would jointly cause the earth to be still in that frame of reference

This is not so simple. The force of the gravitational waves depends on the mass of the rest of the universe. One can easily imagine the same observable rest of the universe with a very different mass (just remove all the dark matter or so). Both can't generate the same gravitational waves, but there would be no significant observable effect on Earth. The metric around here would be still more or less Schwarzschild (or Kerr). The fact that steady state can be interpreted as rotation whose effects are cancelled by gravitational waves has not necessarily much to do with the existence of other objects in the universe. Even in empty space, the gravitational waves can come from infinity.

So, while it's true that there is no absolute space with respect to which one measures the acceleration, there are still Foucault pendula. Because there is no absolute space, to define what constitutes rotation using any particular coordinates would be absurd. But we can still quite reasonably define rotation (extend our present definition of rotation) by use of the pendulum, or bucket, or whatever similar device. Even in single-planet universes, there can be buckets with both flat and parabolic surfaces.