The insert paragraph command is not included in the Lite version of the RadEditor for MOSS. It is only present in the regular version. You can try the following workaround - open the ListConfigFile.xml from \Program Files\Common Files\Microsoft Shared\web server extensions\wpresources\RadEditorSharePoint\184.108.40.206__1f131a624888eeed\RadControls\Editor\ and add this property:
This will instruct the editor to insert paragraphs (<p>) instead of brakes (<br>) when you press enter. If you still want to insert breaks, use Shift+Enter.
I understand that this might not be the best solution so I will talk to the dev team to add the insert paragraph command into the next lite editor version.
the Telerik team