Semi-success! 

Got a reply back from Telerik to the question - you can set custom toolbars on a per portal or per page basis with the standard editor provider included. To do per instance you need to modify the provider. Here is what they said in case anyone else would like to know:

"You can set specific tools files based on the current portal or the current page id. This way you can have different toolbars on different pages. Setting the ToolsFile="*PortalRoot*/ToolsFile.xml" property in the editor provider configuration in the Web.config file will look for the tools file in the current portal root folder. Setting ConfigUsesPageID="true" in the web.config provider configuration will try to load a tools file with the current page id. For example if you are on the page "http://localhost/dotnetnuke_2/Home/tabid/38/Default.aspx" then the editor will look for a file called ToolsFile38.xml. If there is no such file the editor will use the default toolbar.

If the above customizations are not usable in your scenario, you can easily modify the editor provider. Its code is in the ~/App_Code/TelerikWebUI/RadEditorProvider.vb file in your DNN site. The tools file loading logic is in the GetToolsFile() function."

Greg