I'm working on a Northwind demo application that uses WCF. I just started looking at Telerik Reporting last night and I plan to add at least one report or datasources that ties into some WCF endpoints. Contact me via my blog and I can send you a link to the app but don't want to share it out right now because it's on a home server.
There is an option to set your report to a Business Object. What I do is create a proxy class for my UI that mirrors all my WCF endpoints. I've set my report to the proxy assembly for now and that's about as far as I've gotten.