There are a number of ways you can change what's called the "binding", the mapping of file type to application in Microsoft Windows 7, but what I prefer is to use the Control Panel designed for the task ingeniously called "Default Programs".

The default action in Windows 7 is to "assign every type of file this program can open" rather than going filetype by filetype, which is easier, I suppose, but still makes it rather tricky to work with if you're hoping for something with a bit more granularity. Stay tuned, though, you'll see that's not too difficult if you'd rather muck about with the innards of Win7.

Let me show you how to let a program own every file type it knows, then we'll look at a how to fine tune that to get a second app own a specific file type in Windows...

Click on the START menu, then look for "Default Programs" on the "Control Panels" menu:

Once you choose it, you'll see there are a couple of options for reassigning default programs and the like:

Here you can go the manual route of assigning a specific file type to a specific program, which could be useful if you want .PSD and .PNG files to open in Photoshop, say, while .JPG files are owned by MS Paint, as you've suggested. To do that, click on ""Associate a file type or protocol with a program".

Instead of doing that, however, let's take this easy path and let a program report to the Win7 system what file types it can handle and then create all the appropriate associations. To do that, click "Set your default programs"...

In this case clicking on "Set this program as default" will not only make Internet Explorer my default Web browser, it'll also set it to own bookmarks, files with ".html" suffixes, and similar. Click, then choose "OK" if you're done. Note here, for example, you can also associate audio files like .MP3 and .WMA to the Zune player (if installed) rather than Windows Media Player.

Instead, though, let's find a JPG image file and right-click on it. The context menu has lots of choices, but note particularly "Open with..." and the submenu it offers:

You can pick a specific app to open the file immediately, but we're more interested in the "Choose default program" option, so select it and you'll have a window pop up with all the available programs that have said to the operating system they can handle this particular filetype:

The key is to notice the checkbox on the bottom of this window. It says "Always use the selected program to open this kind of file." If I want to always have MS Paint open up my JPEG or JPG files from now on, rather than Picture Viewer, all I need to do is check the box adjacent to "Always use..." then select the app desired ("Paint") and click "OK".

Want to dig further into it? You're opening up a potential can of worms, but if you go back to the Control Panels "Default Programs" and choose "Associate a file type or protocol with a program", you'll find that Microsoft Windows 7 does indeed still have a filename suffix to application mapping you can explore and modify:

Pick the suffixes and filetypes you're interested in and with a liberal use of the "Change Program..." button on that page, you can tweak and fine-tune things to your heart's desire.