Hi Jason Grovert,
I was able to test the scenario you are describing with AJAX Extentions for ASP.Net but was not able to reproduce any exceptions. I did the following:
1. Created User Control with UpdatePanel on it.
2. Added Script Manager to the master page.
3. Updated my web.config.
4. Added the control to the page and some other control to the page without any errors.
Can you let me know what exception you get and if there is some inconsistency in my and your steps with using ajax user controls. Perhaps it would be much easier if you could send us some basic project which rises the problem. Thanks in advance. I am looking forward for your reply.
All the best,
the Telerik team