Looking through the issue, it turns out that the reason for this behavior lies not with the RadColorPicker control, but rather with the dialog control from the jQueryUI framework. The container of the dialog with class ui-dialog has overflow set to hidden, thus not allowing any content to go out of its bounds.
Your option could be to set the overflow of the dialog's container in the dialogopen event handler to visible, thus allowing any content to go out of the bounds. Still keep in mind that this may interfere with the normal execution of the dialog and any such change should be very well tested.
Hope this helps.
All the best,
the Telerik team
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