Unfortunately I was not able to reproduce the issue. For your convenience I attached a small video with my test. Inform me if I am doing anything wrong.
However here is what I suggest.
1. I attached my MOSSEditorTools.js which is located in Program Files\Common Files\Microsoft Shared\web server extensions\wpresources\RadEditorSharePoint\220.127.116.11__1f131a624888eeed\RadControls\Editor\Scripts\7_3_6
folder. Please check it and compare it with the one in your server. Try using it instead as well.
2. As it is described in the http://www.telerik.com/community/forums/sharepoint-2007/lite-editor-for-moss/images-always-go-at-the-top-of-the-content-placeholder.aspx
article try adding the following code to the beginning of RadEditorCommandList["MOSSLinkManager"]
(commandName, editor, oTool)
(window.RadControlsNamespace.Browser.IsIE && document.documentMode) editor.SetFocus();
the Telerik team
Do you want to have your say when we set our development plans?
Do you want to know when a feature you care about is added or when a bug fixed?
Telerik Public Issue Tracking
system and vote to affect the priority of the items.