" .... Apparently, he strung them with Black Diamond guitar strings....."

"Dulcimer strings" have only been sold for 20 years or so. Before that your major choices were guitar or banjo strings or piano wire. I believe that banjo strings were the general preference.

"......  The frets appeared to be staples..... "

Staple frets were common before 1950, and are still used on "reproduction instruments" made by several of the members of this forum.

The bulk of Niles' work was before the beginning of the popularization of "folk music" about 1950. He was very much an academic musician based at UK. I suspect that he liked to be the center of attention and performed accordingly.

A group of us visited the Niles Center back in 2018. We were able to not only view, but also handle all of the instruments. Niles had some interesting ideas. Listening to him play and sing is an "acquired taste." While he did build some instruments, as John said "he had some builders make him dulcimers." Dr. Pen has the most knowledge of anyone I know about Niles and his instruments. Dr. Carr was very gracious in hosting us at the Center. We did see some patterns and drawings he made for some of the instruments. I don't know if there are any specific articles about the instruments themselves which talk about why he did what with a particular dulcimer.

Ken

"The dulcimer sings a sweet song."

John Jacob Niles was a unique (only one of its kind) individual, it seems. 

He liked to give "theatrical" performances with his dulcimers, interpreting a folk song rather than just playing it.  He had some dulcimer builders make him dulcimers, with no frets installed, so he could add his unique fret patterns to enable him to get the musical effect he was shooting for.  And he sang some very high-pitched melodies.  Takes some getting used to...

A few years ago, I was at the Niles Center at UK and got to see his dulcimers up close. Man, those things are wild! Apparently, he strung them with Black Diamond guitar strings. The frets appeared to be staples. He used them to strum as accompaniment. They were beautiful but also kind of crude, and according to most experts had pretty bad sound. I had the pleasure of speaking with his biographer, Ron Pen. He said he tuned one up once and tried to play it a bit. Anyone have any knowledge of Niles's dulcimers? They're fascinating to me.