It looks like the AutoBindBehavior doesn't handle the case where custom PropertyDefinitions are used, a PropertySetMode of Union or Intersection is used and an IEnumerable is assigned to the PropertyGrid.Item. This results in a Linq exception: Sequence contains no elements with the following callstack:
at System.Linq.Enumerable.First[TSource](IEnumerable`1 source)
at Telerik.Windows.Controls.Data.PropertyGrid.AutoBindBehavior.BindEditor(FrameworkElement editorElement, DependencyProperty property)
at Telerik.Windows.Controls.Data.PropertyGrid.AutoBindBehavior.<>c__DisplayClass4.<OnUpdateBindingOnElementLoaded>b__0(Object s, RoutedEventArgs args)
at System.Windows.EventRoute.InvokeHandlersImpl(Object source, RoutedEventArgs args, Boolean reRaised)
at System.Windows.UIElement.RaiseEventImpl(DependencyObject sender, RoutedEventArgs args)
at System.Windows.BroadcastEventHelper.BroadcastEvent(DependencyObject root, RoutedEvent routedEvent)
at System.Windows.BroadcastEventHelper.BroadcastLoadedEvent(Object root)
at MS.Internal.LoadedOrUnloadedOperation.DoWork()
at System.Windows.Media.MediaContext.FireLoadedPendingCallbacks()