Smart Object Conical Adjustment

[bode20]

Hi,

I'm trying to create a template for a latte mug which is of course conical shaped.

I've created a print area layer 160mm x 102mm, converted it into a smart object (to place future designs into).

Then edit > transfer > warp > 23.5 degrees to match the horizontals and angle of the mug. All good so far.

The only problem now is that any rectangle blocks in a design are now distorted ( see attachment ).

I need these distorted rectangles to be vertically parallel. I've tried going into the smart object design and distorting the image to compensate (creating a fat bottomed trapezium) but it is too destructive on the image causing any text to blur.

Can anyone solve this?

[bode20]

This is what the overall template look like. Thanks.