Someone recently helped me out with this one so here is what I have learned from playing with this:
First you have to edit the active target of your program to allow it to read documents with the extensions you want ("*" for all, "fold" if you want folders, as well).
Then you have to implement the "openFile" method in your application's delegate:
"- (BOOL)application

NSApplication *)theApplication openFile

NSString *)filename"
This method will be called once for every file that is dropped on the icon. If you drop onto it while it is not open, this method will be called before the "applicationdidFinishLaunching" method (just a FYI).
Hope that helps,
Jeff.
Edited to remove smilies from code.
[ 08-02-2001: Message edited by: Apocalypse ]