Thank you for the follow up.
Unfortunately this could be fixed with a setting, since the Menu control is bound to the Sitemap, in which the the urls are relative to the domain, including the page name. That said, you should do the following:
1. In the code behind of the menu, find the onDataBind event handler
2. You will have an access to the current element by the arguments - e.item
3. Check if e.item.NavigateUrl is "~/home.aspx" for example, if yes, change e.item.NavigateUrl="www.domain.com"
I hope this helps.
the Telerik team