The Editor control from the Telerik UI for ASP.NET AJAX relies on the editable content capabilities of browsers. In that respect all content is rendered on the page and thus translated as HTML. This forces the browser parsing and rendering machines to evaluate the content and try to fix any missing HTML content.
You will get the same result if you try to add invalid HTML to an existing DOM element:
On the other hand, if you wish the content in the Design mode to appear as "<div>content", then you should encode it on the server:
theEditor.Content = HttpUtility.HtmlEncode(content);
Hope this helps.
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