Hi John,
I occasionally run into this issue with the VS designer, not sure what the cause is. In one place where I could not get it to stop changing the reference back to UserControl, what I did was cast the UserControl as the more specific type from code before using it.
However, I will say using PageMenu in a SiteModuleControl rather than in layout.master is not an anticipated use, if it works great, but it was intended to be used only in layout.master and that is the only scenario where I test it.
Best,
Joe