Telerik controls does support SL3 - more info here:
I strongly suggest you to use Silverlight 3 once we release our official SL3 compatible service pack (next week) - currently our SL3 binaries can be found as latest internal build
. Silverlight 3 is already pushed through Windows Update and most probably will be adopted fully very soon - you can still use SL 2 (SL3 is backward compatible) however you will miss all new features like RIA services and many more.
All the best,
the Telerik team