I do remember the prohibition of sheath knives (fixed blade knives worn in a belt sheath) that applied to summer camp but I don't remember it being enforced by the scout master of the local troops.
Here is the section of the Rifle Shooting Merit Badge pertaining to the muzzle loader option;
OPTION C --- MUZZLE - LOADING RIFLE SHOOTING
a. Discuss a brief history of the development of muzzle-loading rifles.
b. Identify principal parts of percussion and flintlock rifles and discuss how they function.
c. Demonstrate and discuss the safe handling rules of muzzle-loading rifles.
d. Identify the various grades of black powder and their proper use.
e. Discuss proper safety procedures pertaining to black powder use and storage.
f. Discuss proper components of a load.
g. Identify proper procedures and accessories used for loading a muzzle-loading rifle.
h. Demonstrate the knowledge, skills, and attitude necessary to safely shoot a muzzle-loading rifle on a range, including range procedures.
i. Shoot a target with a muzzle-loading rifle using the five fundamentals of firing the shot.
j. Identify the materials needed to clean a muzzle- loading rifle safely. Using these materials, demonstrate how to clean a muzzle-loading rifle safely.
k. Identify the causes of a muzzle-loading rifle's failing to fire and explain or demonstrate proper correction procedures.
l. Discuss what points you would consider in selecting a muzzle-loading rifle.
m. Using a muzzle-loading rifle of any caliber and shooting from a bench rest or supported prone position, fire three groups (three shots per group) that can be covered by the base of a standard-size soft soft drink can.
n. Center the group on the target and fire three groups (five shots per group). According to the target used, each shot in the group must meet the following minimum score: (1) at 25 yards using NRA A-23 or NMLRA 50-yard targets - 7; (2) at 50 yards using NRA A-25 or NMLRA 100 yard targets - 7. [/size] And here is what the NMLRA says about instructing the muzzle loader course;
NRA-NMLRA Basic Muzzleloading Rifle:The course is 12 hours in length and includes classroom instruction and time on a range shooting a muzzleloading rifle. Students learn the NRA’s three rules for safe gun handling; parts; loading; shooting; cleaning; shooting from a standing position and shooting from a crossed stick position; and continued opportunities for skill development. Students will receive the Muzzleloading Rifle Handbook, NRA Gun Safety Rules brochure, Muzzleloading Student Examination, Winchester/NRA Marksmanship Qualification booklet, course completion certificate. (Lesson Plan 1985, reprint 1-08)[/size].
I can't find anything prohibiting traditional black powder being used, but maybe I'm not looking in the right places?