That has long been an issue of contention. Apple needed to make some concessions in order to give as optimal a solution as possible.
The problem you're experiencing is with an application which is a generic file viewer and a classic application. There's no OS X version of Picture Viewer to share the same creator code.
Now, if you have a jpeg file created in Photoshop 5 and have Photoshop 5 and Photoshop 7 installed, then OS X will launch "classic" and PS 5 first. If you remove PS 5, OS X will still recognise the PS creator code and open the file directly in PS 7.
So, OS X appears to give priority to the creator code if it's present, otherwise it'll look for the suffix.
If you remove PS 7, then you'll have a generic jpeg file and if you have appended the .jpg or .jpeg extension, then Preview may auto launch. Otherwise you could use and/or choose any other application capable of viewing a jpg.
That is basically the flow the system will follow.
