With the CSS decoration applied, the described behavior is expected to happen. Note that when scrolled to bottom, the viewport of the treeview is behind the gray area and thus, it is expected to need to go to the top position for the autoScroll to take action.
In your case, you can play around with the layout to adjust the scrolling container so to best fit the case and the requirements you are after. For example: http://dojo.telerik.com/IGujU/8.
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