Thank you for the response rdmptn, but while in the process of waiting for someone to respond with an appropriate and acceptable resolution; I managed to figure out the solution to the issue. So I am posting this for others who may also have the concerns for performance and require a viable solution to the problem.
Rdmptn has already done a very fine job proposing workarounds this problem. In fact, the cause of the problem is in fact as has already been stated. However, there is another way to have the AJAX ToolkitScriptManager implemented with the CombineScripts flag set to true to alleviate excessive roundtrips and also use the Telerik Controls in a performance efficient manner. I had to experiment a bit in effort of finding this solution so maybe this will help others. The Telerik support staff was unable to provide this solution, so I am also giving it to them.
First, you have to identify the required Telerik Script references required for your particular scenario. You may acquire this from the following link: http://www.telerik.com/help/aspnet-ajax/introduction-disabling-embedded-resources.html
Then find the Telerik control(s) you need on your site. You will note that the options provided in this link restate the 3rd bullet point provided by rdmptn. However, the method I am describing does not require any modification to the web.config nor does it use CDN references. Our decision to opt out of CDN references is to avoid further potential performance degradation by reliance on other sites.
Once you've identified the control(s) you require, copy and paste the ScriptReferences from the link provided into a tag within the AJAX ToolkitScript Manager. In my case, the resulting code would look like this:
<ajaxToolkit:ToolkitScriptManager ID="ToolkitScriptManager1" ScriptMode="Release" runat="server" EnablePartialRendering="true"
CombineScripts="true" CombineScriptsHandlerUrl="~/AjaxScriptMergeHandler.ashx">
<CompositeScript>
<Scripts>
<asp:ScriptReference Path="~/Scripts/Common/Core.js" />
<asp:ScriptReference Path="~/Scripts/Common/jQuery.js" />
<asp:ScriptReference Path="~/Scripts/Common/jQueryPlugins.js" />
<asp:ScriptReference Path="~/Scripts/Common/HTML5UI/html5/core.js" />
<asp:ScriptReference Path="~/Scripts/Common/HTML5UI/html5/dataviz/core.js" />
<asp:ScriptReference Path="~/Scripts/Common/HTML5UI/Data/html5/data.js" />
<asp:ScriptReference Path="~/Scripts/Common/HTML5UI/html5/userevents.js" />
<asp:ScriptReference Path="~/Scripts/Common/HTML5UI/DataViz/html5/dataviz/themes.js" />
<asp:ScriptReference Path="~/Scripts/Common/HTML5UI/DataViz/html5/dataviz/chart.js" />
<asp:ScriptReference Path="~/Scripts/Common/HTML5UI/DataViz/html5/dataviz/svg.js" />
<asp:ScriptReference Path="~/Scripts/Common/HTML5UI/DataViz/html5/dataviz/vml.js" />
<asp:ScriptReference Path="~/Scripts/HtmlChart/RadHtmlChart.js" />
</Scripts>
</CompositeScript>
</ajaxToolkit:ToolkitScriptManager>
This approach allows the AJAX ToolScriptManager to explicitly minimize the number of Scripts required to support the components you actually use in your site (or webpage) having the CombineScripts tag set to true while simultaneously loading only those Scripts that are required within your application to be loaded for the Telerik controls.
No more being set to false as has been the often response for the noted incompatibility issues; while at the same time loading only the required Scripts to support your Telerik controls. VOILA!
Hope this information helps others and saves them the time we've wasted to get a resolution.
Again, thank you rdmptn for posting your suggestions!