Reports are processed and rendered on the server, where the Reporting RESt service is running. The HTML5 viewer is only a client that can reside in any web application. the viewer loads content rendered on the server.
About binding data, there is no data source component that works directly with JSON formatted data. We can suggest you to create a data access layer in which yo consume the JSON data into a .NET data object e.g. DataTable or business object, and then use it via ObjectDataSource component.
Please consider the example in Connecting Telerik Reporting to OData feeds.
I hope this helps.
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