Kim,
Although this doesn't answer your question, the Telerik menu
does work with both IE7 and the IE8 beta (at least for me on the website I maintain)
if you include the following meta tag:
| <meta http-equiv="X-UA-Compatible" content="IE=7" /> |
For some reason, that only works for me when it is the first meta tag. Not sure why. I hope that helps!
Paul H