Thank you for writing.
Yes, it is possible to use the ToolWindow collapse button to perform some action - change its width in this case. Attached you can find a sample application demonstrating how to implement it. Basically, I am subscribing to the Click event of the AutoHideButton initially, and one more time when the ToolWindows dock state changes, because this might lead to recreating the whole window, thus I will loose my event subscription.
Also, when the user attempts to auto hide the window, I am canceling the operation and I am setting the window Tag, so I can later use it to determine which size should I set.
Let me know if you need further clarification of this approach.
the Telerik team