It appears that this feature was skipped in the user story found at the URL you provided.

https://github.com/telerik/kendo-ui-core/issues/1687

It would really be nice to get this feature into that story or to have a new story created that includes this feature.

This is the same feature discussed in here: http://kendoui-feedback.telerik.com/forums/127393-kendo-ui-feedback/suggestions/4323866--tag-input-plugin

We would immediately use this feature if implemented.

Hopefully this would be done through an event or a method so as user types a value that is not in the list, it can be validated before allowing user to add it as new tag.

Here is a simple scenario: Multi select is used to allow users to select emails from a list. User types email that is not in the list, the program should be able to validate the entry and only allow add when a valid email address is entered. 

So what's the progress on this?

+1 on this feature.  We had to end up using the Select2 control, which then obviously doesn't follow the same theme of the 'multiselect' that we use everywhere else.  Where look and feel is more important, it actually forced us to use the select2 control everywhere else, because it was too difficult to accurately change the CSS to match one or the other.

I agree with David Berman. This is a very important requirement in our application as well. I hope this feature will be added soon and we don't have to spend a lot time trying to hack it and make it work with AngularJS.

This is a very important feature and it needs to work from angular as well.  I just burned two days trying to get this to work from within angular. The hacks on the forum are incomplete and don't work with angular.  A typical use case for this feature is to apply TAGS to post.  Users expect to be able to add any tags they want.

This is something I definitely would like to see incorporated into this control.