Indeed, I managed to reproduce the issue when binding RadPropertyGrid Item property to an instance of RadGridView. I will investigate the issue and let you know once I have more information.
In the meantime, you could try setting the Item once the grid is loaded. For example:
private void MyTelerikGrid_Loaded(object sender, RoutedEventArgs e)
this.MyPropertyGrid.Item = this.MyTelerikGrid;
the Telerik team