Right, there's kinetic energy in a system, and potential energy. For example the total energy that can be released from a moon in orbit is it's 1) kinetic energy of motion plus 2) potential energy, available thru the gravitational fields. If something with rotational energy shrinks it's rotational speed necessarily speeds up (energy conservation), and that can cause friction, resulting in heat. Any energy that isn't radiated away gets converted to heat ultimately yes. (this all omits nuclear reactions too!)
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Right, there's kinetic energy in a system, and potential energy. For example the total energy that can be released from a moon in orbit is it's 1) kinetic energy of motion plus 2) potential energy, available thru the gravitational fields. If something with rotational energy shrinks it's rotational speed necessarily speeds up (energy conservation), and that can cause friction, resulting in heat. Any energy that isn't radiated away gets converted to heat ultimately yes. (this all omits nuclear reactions too!)