Using camera rotation wrong. Don't need Vector to accomplish.

EDIT - Simple misplacement of Space.World was killing my brain. Read below reply to see how to use simple camera rotation left and right on Y if you are having the same problem as me.

using UnityEngine;
using System.Collections;

public class MouseRotation : MonoBehaviour {
	
	private float mouseX;
	
	void LateUpdate(){
		
		HandleMouseRotation();
		
		mouseX = Input.mousePosition.x;
	}
	
	public void HandleMouseRotation()
	{
		var easeFactor = 10f;	
		if (Input.GetMouseButton(1))
		{
			//Horizontal rotation
			if(Input.mousePosition.x != mouseX)
			{
				var cameraRotationY = (Input.mousePosition.x - mouseX) * easeFactor * Time.deltaTime;
				this.transform.Rotate (0,cameraRotationY,0);
			}
			
		}
		
	}
	
}

Rotate defaults to local space (Space.Self). If you want to rotate about world Y, specify Space.World:

      this.transform.Rotate (0, cameraRotationY, 0, Space.World);