I just found the following blog post that looks at least close to what you want.
They manage it using the following javascript functions:
function initCascadingAutoComplete() {
var moviesAutoComplete = $find('autoCompleteBehavior1');
var actorsAutoComplete = $find('autoCompleteBehavior2');
actorsAutoComplete.set_contextKey(moviesAutoComplete.get_element().value);
moviesAutoComplete.add_itemSelected(cascade);
// setup initial state of second flyout
if (moviesAutoComplete.get_element().value) {
actorsAutoComplete.get_element().disabled = false;
} else {
actorsAutoComplete.get_element().disabled = true;
actorsAutoComplete.get_element().value = "";
}
}
function cascade(sender, ev) {
var actorsAutoComplete = $find('autoCompleteBehavior2');
actorsAutoComplete.set_contextKey(ev.get_text());
actorsAutoComplete.get_element().value = '';
if (actorsAutoComplete.get_element().disabled) {
actorsAutoComplete.get_element().disabled = false;
}
}
Sys.Application.add_load(initCascadingAutoComplete);
Calling the cascade function on the add_itemSelected method of the parent control for the cascading behaviour.
They cascade the contents of one auto complete extender into another, rather than taking a cascading drop down list, but hopefully you can reuse some of the ideas.