I have updated my example to hopefully make it clearer what I mean: http://dojo.telerik.com/uTAHe/4
I have removed the redundant timezone set on the scheduler to avoid confusion. The datasource in my example is set to UTC, but the data inside it has the startTimezone and endTimezone override set to Sydney. I have set it up this way as I am parsing an iCalendar file with different timezones set.
The second occurrence for Test1 should appear at 2am when viewed from UTC time. I think this is a bug where the timezone offset is used from the first event and not calculated on each recurrence.
Looking at the source code of v2017.1.118 kendo.scheduler.recurrence.js, should line 887 in the expand function account for changing zones instead of using the eventStartMS?