Thanks Marin for the reply.
I have already tried your suggestion of the clearing the temp and cached files multiple times to no avail. I tried again for good measures not change.
In addition I had compared a newly create project to the ones that had the issue with unknown element in source view, I couldn't find anything significantly different.
However, in my efforts to diagnose this issue, I made a copy of my project that had this issue in VS2012, and started removing things, shutting down VS between each change and retrying a simple webform.aspx with no master page and dropping a <telerik:Scriptmanager on the page, check designer and then check source view, same issue with unknown element.
Most all of my project contains multiple web applications within the same solution, so I started removing projects, and after I remove the last web application sub-project within the solution, then rechecking my webform.aspx in my main project, everything seemed fine.
The last web project removed from the solution was named Help, so I thought maybe it's something to do with the name Help. I then copied my copy back over and started over, removing just the Web Application Help. Rechecking my webform.aspx, the problem was back. So I removed all remaining web applications only, leaving everything else the same, rechecked my webform.aspx and everything was fine again.
At this point I had it narrowed down to my web-applications within the solution. I then checked the settings for each and I had my build output path set to ..\bin\ which put all my dlls in the main projects bin directory which was handy when doing a deployment to a file system, which yielded a single bin directory, however this only worked up to VS 2008, deployments in VS2010 forward still create a bin under each web applications directory, that I manually remove when I do deployments. Anyway, I remove the ..\ and set it back to the default of bin\
rechecked my webform.aspx and viola everything was working as expected, no more unknown elements.
I've tested this on multiple applications and removing the ..\ from the web applications build output path seems to do the trick. Or at least it has on all of my projects that I've tried it on.
Talk about a long detailed process of elimination, but I believe I've found the trick.
I would be curious if someone else would create a project in vs2010 and add a couple web application projects to the same solution, and set the build output to ..\bin\ then migrate the 2010 app to VS2012 to see if they have the same issue that I seen with the unknown element with all Telerik controls while in source view in the VS2012 app.
Hopefully this will save someone some time, as it's cost me allot of time diagnosing this one.
On a side note, I find it rather interesting that Telerik's RadEditor spellcheck, doesn't recognize the word Telerik by default.
Thank you again for looking into this.