Is there a way to associate a file type (i.e., extension) with a silverlight application that has been installed as an out-of-browser application?
I would like to associate a particular file extension with my app and allow double-clicking on those files to open them in the silverlight application.
It may be possible to cause a double-click of a file to launch the out-of-browser application. However that won't be any use unless you can then access the file that was clicked and access its contents in someway. This sort of thing is deliberately designed out of Silverlight.
So the answer to your question is most likely yes but it won't be very useful.
No, I don't believe that is possible.
The only way to open files outside of isolated storage is by using the OpenFileDialog which has to be initiated from the Silverlight application.
Your application does not know about the local filesystem. It only knows about the file that the OpenFileDialog passed to it.