This is the Angular.js directive that converts html select boxes with Angularjs bindings into the Twitter Bootstrap dropboxes. See examples on jsfiddle: http://jsfiddle.net/M32pj/28/

gistfile1.js

angular.module('bsselect', [])
.directive('bsSelectbox', function ($parse) {
    return {
        restrict: 'A',
        priority: 100,
        transclude: true,
        scope: {
            themodel: '=ngModel',
            thearray: '@ngOptions',
    		thechange: '&ngChange',
            defaultval: '@bsSelectbox'
        },
        template:
            '<div class="bs-selectbox btn-group">' +
            '<button class="btn dropdown-toggle" data-toggle="dropdown" type="button">' +
            '{{display}} ' +
            '<span class="caret"></span>' +
            '</button>' +
            '<ul class="dropdown-menu">' +
            '<li ng-show="defaultval">' +
            '<a href="javascript:" ng-click="change(false)"> <span>{{defaultval}}</span> </a>' +
            '</li>' +
            '<li ng-show="defaultval" class="divider"></li>' +
            '<li ng-repeat="itm in elements" ng-class="{active:itm.value==themodel}">' +
            '<a href="javascript:" ng-click="change(itm)">' +
            '<span>{{itm.label}}</span>' +
            '</a>' +
            '</li>' +
            '</ul>' +
            '<div style="display:none;" class="bs-selectbox-transclude" ng-transclude></div>' +
            '</div>',
        link: function (scope, element, attrs) {
            scope.display = '--';
            scope.elements = [];
            attrs.$observe('bsSelectbox', function (value) {
                if (value) scope.display = value;
            });
            attrs.$observe('ngOptions', function (value, element) {
                if (angular.isDefined(value)) {
                    var match, loc = {};
                    var NG_OPTIONS_REGEXP = /^\s*(.*?)(?:\s+as\s+(.*?))?(?:\s+group\s+by\s+(.*))?\s+for\s+(?:([\$\w][\$\w\d]*)|(?:\(\s*([\$\w][\$\w\d]*)\s*,\s*([\$\w][\$\w\d]*)\s*\)))\s+in\s+(.*)$/;
                    if (match = value.match(NG_OPTIONS_REGEXP)) {
                        var displayFn = $parse(match[2] || match[1]),
                            valueName = match[4] || match[6],
                            valueFn = $parse(match[2] ? match[1] : valueName),
                            valuesFn = $parse(match[7]);
						scope.$watch(function(){ return valuesFn(scope.$parent); }, function(newVal) {
							var collection = newVal || [];
							scope.elements = [];
							angular.forEach(collection, function (value, key) {
								loc[valueName] = collection[key];
								scope.elements.push({
									'label': displayFn(scope.$parent, loc),
									'value': valueFn(scope.$parent, loc)
								});
							});
							scope.setdefault();
						});
                    }
                }
            });
            scope.$watch('themodel', function (newval, oldval) {
                scope.setdefault();
				if(angular.isFunction(scope.thechange) && (newval != oldval)) {
					scope.thechange();
				}
            });
            scope.setdefault = function () {
                angular.forEach(scope.elements, function (value, key) {
                    if (value.value == scope.themodel) scope.display = value.label;
                });
            }
            scope.change = function (itm) {
                if (!itm) {
                    scope.display = scope.defaultval;
                    scope.themodel = "";
                } else {
                    scope.display = itm.label;
                    scope.themodel = itm.value;
                }
            }
            var elements = element.find(".bs-selectbox-transclude").children();
            if (angular.isObject(elements) && elements.length) {
                    angular.forEach(elements, function (value, key) {
                        scope.elements.push({
                            'label': value.innerText,
                            'value': value.value
                        });
                    });
                    scope.setdefault();
            }
        },
        replace: true
    };
});

Please upgrade your source code in ordre to $compile your template. It doesn't work with AngularJS 1.2+.
Thanks.