When using custom DataTemplates for the timeline items, the selection feature does not work,
 
The workaround for this problem is to use a custom control in the DataTemplate that inherits TimelineItemControlBase. You can use the ControlTemplate of this custom control to define the look and feel of the timeline items as well as their visual states. The approach is demonstrated in our First Look demo - http://demos.telerik.com/silverlight/#Timeline/FirstLook .

Fix available in LIB Version 2016.2.516.