Indeed, you need to set the validation properties for the binding. As you already know, this can be achieved using the AutoGeneratingPropertyDefinition event:
void rpg_AutoGeneratingPropertyDefinition(object sender, Telerik.Windows.Controls.Data.PropertyGrid.AutoGeneratingPropertyDefinitionEventArgs e)
(e.PropertyDefinition.Binding as Binding).ValidatesOnDataErrors = true;
(e.PropertyDefinition.Binding as Binding).NotifyOnValidationError = true;
As for your problem - I've tried to reproduce it using the 2013.3.1316 version of our control, but without any success. You can find attached the mentioned sample project.
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