The problem here is that RadPanelItem in not a contol. You actually can see that there is no intellisense for it, when you try to type it down outside of <items></items> clause.
My advice would be to create the template in the code-behind as a class implementing the ITemplate interface, to handle the TemplateNeeded event of RadPanelBar and having that it's thrown for each and every item during the dataBinding process you can even decide what template to assign (if having more that one types of items).
Here is a reference for creating the template(s): http://www.telerik.com/help/aspnet-ajax/panel_add-templates-runtime.html
Here is a reference to the TemplateNeeded event of RadPanelBar: http://www.telerik.com/help/aspnet-ajax/telerik.web.ui-telerik.web.ui.radpanelbar-templateneeded_ev.html
Please, let me know if the suggested worked for you!
I hope this is helpful!
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