The license agreement redistribution limitation is only for modules which directly replace the functionality for what Telerik offers. Actually I wasn't aware of this. See this Telerik forum discussion and you feel the sense that this is a grey area and you really have to ask them first and could  go deep in consulting a lawyer and maybe have a written agreement with Telerik (so they don't sue you later) if you plan to sell such a module. Personally I don't like this limitation because I don't want to go through this legal wrangling. To be in the safe side, it seems I will have to provide complete specs and see what they say. I might look at other UI framework vendors and hope they don't have similar limitations (Infragistics, ComponentOne, ComponentArt, DevExpress..etc)

Technically there's no need to redistribue the dll with the module because it already comes with DNN unless you're targetting also pre 5.x (whatever DNN version started bundling the Telerik dll) DNN users. That's another gray area! I am developing a competing module but I am not redistributing the dll so am I in the safe side?

If a developer wishes to create a module that doesn't compete with a Telerik control, like a blog module, it's OK to redistribute the dll and you want to do that  for older versions of DNN users

I was thinking about this further and noticed I didn't word my thoughts correctly. The license limitations are even more serious. They limit the developer from creating controls which can replace controls of the host software, like DotNetNuke and Sharepoint. I referred to Telerik's controls but it's more about the host software.

So for example if DNNTreeView were using the generic ASP.NET controls or another vendor's controls, Telerik's license does not allow me to create a replacement for DNNTreeView using RadTreeView. That's serious and limiting as I am not allowed to make better intrinsic controls than the ones which come with the host software.