I have tested it (on new beta) but the alignment is still wrong in the tabulate-environment. It's correct in the framedtext-environment, but tolerance is still missing, so that a line is still too long.
\definefontfeature[default][default][expansion=quality,protrusion=quality]
\usetypescript[palatino]
\setupbodyfont[palatino,11pt]
\setupbodyfontenvironment[default][em=italic]
\setupalign[hz,hanging]
\setuptolerance[horizontal,stretch]
\setupframedtext[align={normal,hanging,hz}] %NEW
\setuptabulate[align={normal,hanging,hz}] %NEW
\showframe %NEW, for better seeing
\starttext
\subject{Normal Text}
align working, tolerance working.
\input knuth
\subject{Table}
Table resets align/tolerance:
\starttabulate
\NC align/tolerance not working \NC \input knuth \NC\NR
\NC align/tolerance working \NC \setupalign[hz,hanging]
\setuptolerance[horizontal,stretch] \input knuth \NC\NR
\stoptabulate
\subject{Frame}
Framedtext resets align/tolerance:
\startframedtext[width=0.6\textwidth]
align working, tolerance not working
\input tufte
\stopframedtext
\startframedtext[width=0.6\textwidth]
\setupalign[hz,hanging]
\setuptolerance[horizontal,stretch]
align/tolerance working
\input tufte
\stopframedtext
\stoptext