Telerik Reporting is compiled against .NET 2.0 and requires .NET 2.0 to work. Unfortunately, you cannot use it in .NET1.x because the frameworks and their derivatives are not backwards compatible.
The only suggestion I can provide is to migrate your existing application to .NET 2.0. This will be easier to do because it is quite straightforward, compared to porting Telerik Reporting to .NET1. Telerik Reporting is an embedded reporting solution and you will need to do lots of modifications and of course rebuild your existing application.
All the best,
the Telerik team