Yes, but it changes both the default Open and the default Edit to the
same program.
In any event, if you choose PhotoShop as the default "open with"
you then can edit the jpg, right? I mean, even if you could choose
right click Edit, it would then open a program to use for editing.
So for all practical purposes it doesn't make any difference if
you chose "open with" or "edit". Maybe I'm not understanding you.
What do you get when you Right click and choose Edit?
I have Windows Photo Gallery set as the default program to open JPEGs.
When I select a JPEG and right-click Edit, Photo Gallery also opens.
Unlike XP's, Vista's dialog for setting file type associations doesn't
have an option for what to do when you click Edit; it defaults to the
same thing as when you click Open. If I understand correctly, the OP
(and I) would like to change that, so that Open starts one program
(e.g. Photo Gallery) and Edit starts another (e.g. Photoshop). From
what I've Googled, the only way to do this in Vista is by manually
editing the registry.
As a workaround (which the OP probably already knows about) you can
right-click the file and select Open With, then choose your editor from
the list, but *not* set it as the default. Not as convenient as just
clicking Edit, but it works.