Thank you for writing.
The difference between the palettes and the data templates is that a Palette only allows you to set stroke and fill, that is, just colors. On the other hand, a DataTemplate is the Silverlight/WPF way of specifying a whole visual tree. When you specify a DataTemplate you can put rectangle inside, a border over the rectangle, a label or any other visual element you can think of. A DataTemplate allows you to completely define the visualization of your data points. The palette only allows you to specify colors.
If you are using the data templates to only define colors, you should be able to replace them with palettes. However, if you have custom visual elements inside the data templates you will not be able to replace them with palettes.
Please write again if you have other questions.
the Telerik team
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