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When I was first learning computers I'd assumed winrar and winzip were official programs simply because of their names--that is, that they owned the file format. If others make the same mistake, this might explain 7z's market disadvantage.

7zip seems to love to lose file association or simply fails when I double-click a .rar or .7z file, saying file type not recognized (nevermind the fact I just made that very archive with 7Zip!)

I've never had file associations working with 7z on any machine. :/

I think you have to run 7zip as admin when setting the associations.