Unfortunately, this user friendly feature could not be implemented in RadEditor, because the Html and Design modes are two different IFRAME elements (documents) and during the switch from Design to Html mode the selection is automatically lost.
In addition, the content is parsed by the editor's content filters to make it valid XHTML. This process modifies the content and it is not possible to programmatically restore the selection.
By the way, have you by any chance seen a DHTML web (not desktop based) editor that supports this feature?
the Telerik team
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