You cannot get file/uri associations correct in a UX in a way that handles all situations. Essentially, this is a subset of the "many to many relations in database tables fundamentally suck" problem, and every time this happens where it is directly exposed to the user it has never turned out well.
Combine the potential UI/UX nightmare of this with literal actual criminals putting malware on the PCs of technologically illiterate users: it now hijacks 15 different file/uri associations in ways that are not easily fixed.
What Microsoft should do? Do an Android-style ask (yes, the one that all the people like us hate) every time a new handler can be associated. What they can't do? Expressly this because it didn't exist in Win98 when they added uri handler system to the existing file handler system, and Microsoft is obsessed with backwards compat.
Side note: Technically, Firefox could trigger the OTHER existing API for this that UWP apps are forced to use as per MS Store sandboxing, from the C++ WinRT API; any app could. It isn't well documented, and isn't the intended use but WinUI 3.x's path is allowing apps to piecemeal their way into the future without all-or-nothing rewrites. I'm not going to insult Mozilla by saying they "choose not to", I'd rather someone else jump in the deep end first on that.
How Microsoft ended up fixing the actual issue at hand? Removing the need to get another browser in the first place, but still allowing technologically literate users to install one if they want. Edge is Chrome, but without the boneheaded decisions Google makes ruining it, and actually moving forwards in usability.
Edge has vertical tabs built in, it has an actually visually correct dark theme built in[1], has the existing bookmark/history/open tab/etc syncing (which some Chromium-based browsers still do not, as they have to write their own backend), it has an Android version (many desktop Chromium browsers do not have a matching phone version), it has the beginnings of a ABP/uBlock style ad blocker built in (its already in the Android version as well) (Chrome will never ship with adblocking built in, Google's entire business model depends on their ad network), its the first Chromium-based browser that supports the VBS-based hardware-enforced browser sandbox (Microsoft wants to bring it to all Chromium-based things including Electron apps), and it also has tab collections built in (which is also supported on the Android version), and last but not least, they have an actually working PWA container on the desktop (reviving the code Google killed because they didn't want a future where Android couldn't be a vendor lock-in moat).
The number of extensions I need to make Edge actually productive is less than any other browser.
You know what Mozilla brought me? Panorama, which is now gone. An extension system that could actually deeply modify the UI (thanks to XUL), which is now gone (and has been replaced with a partial WebExtension implementation). A PWA-first OS, called FirefoxOS, that would be lighter and faster than Android by several magnitudes, which is now gone. An Electron alternative that used Gecko instead, called Positron, also gone. A PWA container for the desktop called Prism, also dead.
Almost everything Mozilla thought of, half-assed, and then killed, Edge has succeeded, and brought to not only Windows, but OSX, Linux, and Android too, and also salvaged the slowly rotting Chromium codebase at the same time.
[1]: Dark themes should never have backgrounds darker than 16, as the eye has poor "bright on dark" focusing, but most monitors, even ones being sold today, have very poor tracking of values below the limited 16-240 range (even HDR monitors); the two of those together make standard viewing conditions (dimly lit office or indirect sunlight lit room or single 60W equivalent on a desk in a small bedroom, with a 100 nits monitor (sRGB defines optimal brightness as 80 nits + offset for ambient, BT1886 defines SDR white as 100 if not otherwise calibrated, BT2020 defines SDR content in HDR display mode as 100)) hard to read for standard distance and DPI monitors (ex: 24" 1080p or 27" 1440p at ~29 inches, given a 1.2 ratio of screen size to distance) at the standard text size (16px).
Dark themes that have pure black for misguided reasons should be eradicated for user accessibility reasons; contrast and readability are very important for everyone, not just people with diagnosed vision problems.