When you create a dynamic tooltip that loads its content from a service (http://demos.telerik.com/aspnet-ajax/tooltip/examples/radtooltipmanagerclientapi/defaultcs.aspx), its height is 100% while the loading takes place.

You can workaround this issue by configuring a small initial height for the tooltip (for example 50px), then using the following script to change its height according to the loaded content:
		<telerik:RadToolTipManager runat="server"  OnClientResponseEnd="onClientResponseEnd" Height="50px" >
                        ...
		</telerik:RadToolTipManager>

		<script>
			function onClientResponseEnd() {
				var current = Telerik.Web.UI.RadToolTip.getCurrent();
				if (current) {
					var height = $telerik.getBounds(current.get_contentElement()).height;
					current.set_height(height);
				}
			}
		</script>