RX String on UART not working
Are you sure you're properly watching to see if the bluetooth module has filled up it's RX buffer?  I'm really just not sure you're checking the RTS and CTS flags properly.

You should be checking the RTS and CTS flags every character, not just when you begin to send the whole string!  If you fill up the RX buffer on the bluetooth module, currently you'll keep transmitting, even if the RTS or CTS flags change.

You should also check which version of handshaking your module uses:
http://en.wikipedia.org/wiki/Rs232#RTS.2FCTS_handshaking

Last but not least, small nit-pick: Are you actually storing source code in a header?  Please don't!  Put the source in a separate file and just put the prototypes in the header!