How do I set advanced file associations in Windows 7?

I'd recommend Default Programs Editor, which can do this and more.

It has full context menu editing, which would allow you to change the command parameters. Plus, it was designed for Vista/7 with UAC support.

Default Programs Editor Context Menu Editing

Default Programs Editor command details

It's probably because I had to much caffeine but.. In command prompt:

 ftype w3file="C:\Program Files\Warcraft III\War3.exe" -loadfile "%1"
 assoc .your_extension=w3file
 regsvr32 /i shell32.dll

:) .. just change the names of the type and extension to the one you need :)

What you are looking for is File Type Doctor from Creative Element Power Tools.

You get everything back that they, for some reason, removed from Windows Vista onwards.

File Type Doctor preview

Update: for a more modern and simpler solution check out Factor Mystic's answer!