The content area of RadEditor is an editable IFRAME and it uses the Rich Text Editing engine of the browser under which it operates. The reported behavior is browser related and it can be reproduced with a standard editable IFRAME element. For your convenience I have attached a standard HTML page with an editable iframe element in it which you can test to verify that this is a Firefox problem.
Please, note that the Rich Text Editing engine works with valid HTML tags and attributes and the problem could be related to that you load XML tags in the IFRAME.
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the Telerik team
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