Indeed I verified that the described issue exists in our latest version of the controls. It seems that the problem is related with the new grouping mechanism introduced with the latest version of the controls. However our developers are aware and they will start working on the resolution of this issue. To avoid the exception you could setting the RadGrid.MasterTableView.EnableLinqGrouping property to "false".
In Q3 2011 release we have a new Linq based grouping which is turned on by default. This type of grouping has a huge performance optimization and internally uses Dynamic Linq for grouping. Also this grouping is controlled by the MasterTableView.EnableLinqGrouping property(default value is "true"). More information you could find here:
the Telerik team
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