Yes, enter the interest for Schedule E on each rental property under "Other Interest," not on the page for interest reported on Form 1098. Only the property listed on the 1098 should have interest reported on the mortgage interest line.
Basically, the IRS matches the interest you report to the total interest shown on Form 1098. If you report more interest in total than is shown on all 1098's you received, this could possibly trigger an inquiry by the IRS (unlikely). A review of this sort is generally part of an audit, not the automated review of most returns.
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