Too many TreeViewItems are created internally when using virtualization. This causes the tree to consume large amount of space when performing virtualization intensive tasks like CollapseAll or ExpandAll.

The XAML team recently reviewed this issue and will not be addressing it.
On ExpandALL / CollapseALL virtualization creates / recycles / reuses containers - RadTreeViewItems. You cannot be sure when the GarbageCollector will free up the currently unused containers.
Also after even number of invocations (ExpandAll + CollapseAll), the containers that are not freed up from memory is not increasing - it is constant which means there is no memory leak to worry for.