Michael Duffy has released an extended version of the Editable Poly modifier for max 4 that allows edge extruding. Extruding interior edges is not a valid operation for EPoly, so those edges are deselected before the edge cloning. In other words, this only works on border edges using shift-left-drag to extrude the selected edges.
Also note that this is based on the SDK from 4.02 not 4.2 so any changes that have been made to EPoly with 4.2 would be undone with this new EPoly.dlo. I’ll try to recompile to 4.2 and I’ll put the source code changes on a web page as soon as I get a chance. If you have trouble getting this release version to work, try the hybrid version which definitely works, but still has some debug code in it.