Thanks to Sebastian's recommendation (copied below), I was able to debug the problem(s) outlined in this thread. A more elegant solution which I implemented is to render a tag for the user control:
Protected Overrides Sub Render(ByVal writer As System.Web.UI.HtmlTextWriter)
Essentially, this provides a client side element for your user control that can be accessed by the AjaxManager, or anything else which needs a direct client side reference. This let me AJAX update with a LoadingPanel a section of the page based on handling a specific custom event raised by the user control. Where my AJAX manager looks like the following:
<telerik:RadAjaxManagerProxy ID="RadAjaxProxy1" runat="server">
<telerik:AjaxSetting AjaxControlID="MyUserControl1" EventName="MyUserControlCustomEvent">
<telerik:AjaxUpdatedControl ControlID="RadGrid1" LoadingPanelID="LoadingPanel1" />
"If you marked the user control as an initiator or an updated control
through RadAjaxManager setting, the ajax loading panel may not appear
because RadAjax relies on id from rendered html element on the page to
display it. Since your custom user control is not rendered as a
separate html element, RadAjax updates the content inside it but is not
able to show the loading image.
To bypass this unexpected behavior, consider wrapping the custom user
control inside a standard asp Panel and specify this panel as initiator
or updated control."