Thank you for contacting the Telerik support.
Indeed when the aspnet precompiler is used the customized ASCX file is not properly deployed or being overridden by the Telerik.Web.UI library. Such behavior is expected because when the files are compiled the methods of the customized ASCX and the one from built-in are the same.
A simple workaround I found is to insert the customized dialog file from the DEV environment to the deployment server. Using the aspnet compiler, the generated folder structure is the same as the one from the original project and just copying and pasting the file should work fine.
Check out the Telerik Platform - the only platform that combines a rich set of UI tools with powerful cloud services to develop web, hybrid and native mobile apps.