What problem it solves? A picture is worth a thousand words they say:
Editing .reg files without RegFileEdit:

Editing the exact same .reg file with RegFileEdit:

It converts the hex encoded unicode strings into plain text for you to edit, and then converts it back, all transparently. It makes editing .reg files quicker/easier (75,6E,6C,65,73,73,20,79,6F,75,72,20,6E,61,74,69,76,65,20,6C,61,6E,67,75,61,67,65,20,69,73,20,68,65,7
8,61,64,65,63,69,6D,61,6C,3F
It takes only one argument: the name of the .reg file. So you can use it easily from the command line. Or if you don't want to, put the .exe anywhere you want, right click on a .reg file, select open with, pick the .exe (I wouldn't really make it the default tool), done. You'll have it under "open with" afterwards.
Some notes:
-it'll use your default text editor, whatever it may be (notepad, notepad++, ultraedit, editpad, etc)
-doesn't matter if your editor doesn't update timestamp or filesize is the same (or if you save without making changes), as it compares SHA1 hashes
-it now "supports" REG_EXPAND_SZ and also REG_MULTI_SZ. For REG_MULTI_SZ values, new lines are delimited with the ` character (accent grave, right below the escape key on a en-US keyboard layout)
-it requires the .NET framework 2 as it's a C# app
Bug reports in this thread please
Being a beta version, there are no warranties whatsoever that there isn't a bug that will corrupt your .reg files altogether (haven't noticed anything bad though), so I'd backup my .reg files first (I might add a backup function in the next build, I just didn't want it to create .bak files everywhere). And as always you import .reg files at your own risks! No blaming me if someone hoses their registry when importing a .reg file, you know the risks!
Updated screenshot of the app itself:

Download link: http://www.rapidspread.com/file.jsp?id=wgyereacvn
I'm open to suggestions.
