In this case the behavior you experience is completely expected, because you deselect a pie slice when the mouse cursor leaves the series. The gap you pointed out is not a part of the series when the slice is selected. That's why once the cursor is moved even a single pixel while in this gap, the slice will be deselected and, since the cursor is now directly positioned over the pie series again, the slice will be selected, causing a loop as long as the cursor is positioned within the gap area.
As a workaround, you can try deselecting a slice when the cursor leaves the chart. Remove the line
from the PieSeries tag and put it in the RadPieChart tag. Note that, in your case, you'll also have to set the PieChart's width accordingly, otherwise it will stretch to fit the boundaries of its parent element. Thus, the cursor will always be considered inside the chart and pie slices will remain exploded until the cursor is moved away from the chart's vertical boundaries.
the Telerik team