Good tip. I ended up using the .mobi related setting instead, since FBReader displays .mobi files much better formatted than the integrated reader (UDS), and for that matter all the other formats too: .txt, .rtf, .epub (plus the html ones in Mackx' post)
The only drawback would perhaps be the inability to open protected .mobi files, but who (voluntarily) uses those anyway
This also keeps the NewsReader setting free to associate with Xournal files if so desired, as per the original post.
P.S.: I removed my dr1000.ini file to start with a clean slate (not just for file associations) and no new one was created initially. Only after I ran the PC Companion did it put together a new one with all the internal settings etc. Could that be a potential issue for non-Windows users?