If user clicks on e.g "Open in Edge" button and FF intercepts URL with Microsoft's "microsoft-edge protocol" and opens FF, then what's so shocking about the fact that MS is not happy about this?
inb4: I'm saying it as a FF user.
Clearly microsoft thinks they're getting something out of it and you've already bought their license, now you're also forced to use edge even if you dont realise it or want it.
It's not surprising that Microsoft is turning into a bully here, but I wouldn't call cynicism in general about MS being a bully to be overreacting.
What about stuff that doesn't really work in FF or has terrible performance and Windows/MS wanted to open it in Edge?
Responding to your edit: If Microsoft creates a new type of page that works well in Edge but not other browsers, they can make a new protocol for it and allow other browser to support the protocol if they want to. In fact that's exactly what happened here: Microsoft added a new protocol, Firefox said "we support this new protocol with full performance and functionality, so we should be able to open it".