At present, RadImageEditor cannot work with physical paths for images.
However, in the upcoming release of RadControls for ASP.NET AJAX will will introduce support for custom content providers (using the same approach as RadFileExplorer) for RadImageEditor and this will allow the control to work with various storage types.
In addition, we are targeting the release of RadControls for ASP.NET AJAX Q3 2011 to be in the middle of November.
the Telerik team
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