It appears as though the CancelEdit inside an AfterLabelEdit event handler does not work. I know that AfterLabelEdit has been marked as obsolete, but this is the only way to do what I need to do (please see earlier post). The code below is therefore ignored and the label is updated.
void DerivedTree_AfterLabelEdit(object sender, Telerik.WinControls.UI.NodeLabelEditEventArgs e)
e.CancelEdit = true;