When you set RadEditor with ContentAreaMode="Div" and start entering a list under IE7 (this includes IE7 mode and Compatibility mode), the list items after the first one will not be displayed in Design view.

The following workaround should allow you to avoid the problem until it is resolved:

        <script type="text/javascript">
            function OnClientCommandExecuted(editor, args) {
                if ($telerik.isIE7) {
                    editor.repaint();
                }
            }
        </script>
        <telerik:RadEditor runat="server" ID="RadEditor1"
            OnClientCommandExecuted="OnClientCommandExecuted">
        </telerik:RadEditor>