UCS file format is human readable text, but uses the old UCS-2 ECS with a 2 byte BOM (little endian).
I'm not 100% sure if the game would load other file formats properly because I never tested that. It's safer to stick with the default format.
Notepad++ recognizes the default format perfectly, but I wouldn't trust regular notepad to do it.
.WHM files are model files, but sometimes they also contains textures that were folded in -- for example the sky models. I'm not sure what format the texture file data is in... it looks like DDS format at first glance.