The TileView exampe uses RadFluidControls inside each RadTileViewItem. These RadFluidControls have a number of threshold properties which determine at what point the visible content is changed. So, when you remove the preset width and height, you are effectively rendering the RadFluidControl threshold values inappropriate, since those values are specific to the original width and height of the tileview. Thus, you are not observing a bug in the TileView control, but rather an expected behavior caused by the RadFluidControl thresholds.
I hope I was able to make things a bit clearer. Let me know if you have any questions.
the Telerik team