I got it working.  I knew the upgrade to 1607 was going to require a reset of the default browser to FF so I had done that.  Links out of other apps triggered FF as expected so all appeared well except for Pmail.  I did the FF uninstall/reinstall out of desperation which didn't solve the problem but while working on it tonight I discovered that FF was listed twice in the Add or Remove Programs list.  Web searching did not turn up a solution and an uninstall/install/uninstall procedure didn't remove it so I fired up CCleaner and removed all reg entries it found the were associated with FF.  That rogue program entry remained so I edited the registry deleting the one key that held the path to the non-existent uninstaller file associated with that rogue entry.  A cold boot and a fresh install of FF got the open in browser option working correctly again. 

The registry key I deleted appears to have been associated with the rogue entry so it doesn't make sense that removing it was the solution.  I'm guessing that something CCleaner found is what solved the problem and removal of the reg key took care of getting rid of the rogue entry.

After upgrading my Win10 to 1607 my right click > open message in browser functionality is semi-broken.  With IER enabled, that context menu option provides me with the choice of it IE or Firefox.  The IE option works, the FF one does nothing.  With IER disabled, the "Open in browser" option successfully invokes the system default browser (Firefox).  I have uninstalled/reinstalled FF and toggled the system default browser (IE > system restart > FF system restart) but no joy.  Anyone have any other suggestions on how to fix this?

Did you try changing options on Tools => Options => Hyperlinks (i.e. find automatically and commandline) for FF? IER reads them for figuring out your default browser by comparing commands. I would additionally be interested in your Registry entries under HKEY_LOCAL_MACHINE\SOFTWARE\Clients\StartMenuInternet, see below for what I see on Windows 7:

Brian,  As you are working with Windows 10, you may be seeing a problem with the default browser being Edge. The command to invoke Edge is different from any other browser.  It may be possible that once Edge is default that you cannot change the default to another browser.  I have seen a number of articles complaining about Microsoft maintenance/fixes resetting system settings to defaults (including Edge).

So check your default apps list, and check that the browser you want (Firefox) is fully defined in Pegasus Mail Tools/Options/Incoming mail/Hyperlinks

Martin