The reason for this behavior is that in XHTML, if a child element is taller than its parent element, the child element will not cause the parent to be resized as to embrace the child.
You can test this for yourself by examining the result of the following code - note that the content Div is higher than the parent one:
|<div id="parentDiv" style="width: 200px; height: 200px; border: 1px solid red;">
| <div id="childDiv" style="width: 200px; height: 300px; border: 2px solid green;">
Please make sure that your tooltip is large enough to fit the RadEditor control. If you still experience problems, it will be best to open a support ticket and send us a sample project which reproduces the reported behavior. Once we have a better look over your exact setup, we will provide the most appropriate solution.
the Telerik team