If I copy "日本語" from a rich text editor (e.g. Character Map, Wordpad) and paste it into a RadEditor, the following is pasted instead:
If I paste it into a plain text editor (e.g. Notepad), re-copy, and paste into a RadEditor, it pastes correctly. I have observed this under XP and Vista IE7, and Win7 IE8. It works ok in Firefox and Safari. I used your demo page at http://demos.telerik.com/aspnet-ajax/editor/examples/default/defaultcs.aspx to confirm the issue.