When this is happening the editor is unavailable for editing and the button for disabling this mode is also unavailable.

A possible resolution is to use the Form Template option of the EditFormSettings property and set a RadEditor control with the following function attached to the OnClientCommandExecuted event:

function OnClientCommandExecuted(editor, args) {
	var commandName = args.get_commandName();
	if (commandName === "ToggleScreenMode") {
		var isFullScreen = editor.isFullScreen();
		var modalExtender = $telerik.$("#modalDivId_<%= RadGrid1.ClientID %>");

		if (isFullScreen)
			modalExtender.hide();
		else
			modalExtender.show();
		}
	}


Also, this happens with simple DOM elements set with fixed position. The following workaround fixes the Full Screen of  the RadEditor control in all similar cases when elements are overlaying. 

<telerik:RadEditor runat="server" ID="RE1" OnClientCommandExecuted="OnClientCommandExecuted">
</telerik:RadEditor>

<script type="text/javascript">
	function OnClientCommandExecuted(editor, args) {
		if (args.get_commandName() === "ToggleScreenMode") {
			var editorElement = editor.get_element();
			if (editor.isFullScreen()) {
				editorElement.style.position = "absolute";
				editorElement.style.zIndex = "100000";
			} else {
				editorElement.style.position = "";
				editorElement.style.zIndex = "";
			}
		}
	}
</script>