Thanks for your reply Nikolay, I found that what was blocking me from the start was introducing frozen columns that are grouped on. databound's 'e' parameter doesn't recognize the table with frozen columns and thus was not collapsing the frozen columns. Therefore I had to use jQuery selectors to manually achieve that, hence creating this unexpected behavior.
Is this a limitation of kendo grid or a bug?
To Reproduce, set a column to be frozen, then group by that.
Example here: http://dojo.telerik.com/ifaBe/2