Hi Sonia--
Actually, I think that option is meant for the case where the document contains a doctype declaration, but the doctype file can't be found in the specified location. At that point it will prompt you for a new location from which to load the DTD.
For what you are doing, you may need to add some custom ACL code to let users choose a DTD for documents that don't specify one. You could write a function that prompts the user for a document filename, and also for a doctype file (DTD or schema), and then uses doc_open() to open the document with that doctype. You could attach that function to a menu item called "Open with Selected Doctype".
--Clay