This behavior is expected.
Block commands like the InsertList command work on block elements and not with line breaks, just like in MS Word. This is why the default NewLineMode property of the editor is now P, so it generates paragraphs and the user can work properly with them. As for pasted content - it is up to the browser to provide the HTML and this greatly depends on the source of the content and the browser, and RadEditor has virtually no control over that.
You can read more about the current commands' behavior and a way to get an old version of the commands in the following article: http://www.telerik.com/help/aspnet-ajax/editor-inline-and-block-commands-behavior-change.html.