Indeed, I was able to reproduce the issue with RadImageEditor when a MultiBinding is used for setting its Image property. I've logged this in our backlog, but I cannot commit to a specific timeframe when the fix will be available.
As a workaround, you could set the MultiBinding every time the image shall be changed (in your case when the ListBoxItem selection is changed. You could see the attached project which illustrates this. Another option is to use RadImageEditorUI instead RadImageEditor in order to use the MultiBinding for the Image property. The issue cannot be observed with this control and everything works as expected. If its UI doesn't fit for your scenario, you can edit its theme.
However, using a MultiBinding for the RadImageEditor's Image property is not very common and it will be great if you can share with us the exact scenario why this is necessary and we might suggest another solution. For example, you could bind (with a Binding, not a MultiBinding) the RadImageEditor's Image property to a single property from your ViewModel and the logic from the converter used in the MultiBinding might be executed in the property getter.
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