> Does notepad handle clicking "edit" on a shortcut to a batch file? 
> Maybe subcommands don't have exactly the same semantics as regular 
> verbs...

In Windows 7 SP1 a regular verb works fine from a shortcut, but apparently not a subcommand. OTOH, Windows 10 seems to have no problem with this.

I just tested the following subcommand for editing .bat files with notepad:

    reg add HKCU\Software\Classes\batfile\shell\editother\shell\editwithnotepad\command
    reg add HKCU\Software\Classes\batfile\shell\editother /v MUIVerb /d "Edit Other"
    reg add HKCU\Software\Classes\batfile\shell\editother /v Subcommands
    reg add HKCU\Software\Classes\batfile\shell\editother\shell\editwithnotepad /v MUIVerb /d "Edit With Notepad"
    reg add HKCU\Software\Classes\batfile\shell\editother\shell\editwithnotepad\command /ve /d "C:\Windows\notepad.exe %1"

When accessed from the file itself, this works fine in both Windows 7 SP1 and Windows 10 RTM. When accessed from a shortcut, the command works in Windows 10 but does nothing in Windows 7. This independently confirms the issue reported by Thijs as a Windows 7 bug/limitation.