Boy, you are right, the top menu of Edit doesn't work in a Windows telnet session. I never tried it before!
Well, my only suggestion is that you try and find a different command-line editor for Windows, put that on the Windows server, and then run it to edit text files. I was looking for VI for Windows, but all I can find are GUI versions, and that won't help you with telnet.
The only suggestion I have for that is MultiEdit. It was always the big and fancy command-line text editor out there.
http://www.multiedit.com/
This new v9 of it isa GUI, but older versions were command line based. So, you could contact them and see if you can get a command line version.
There might be freeware versions out there somewhere also....