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Of course you can choose the prior. As far as I understand the literature, the BL-model is characterized by using the equilibrium implied returns. Otherwise it would just be a Bayesian model. If you estimate the returns in a different way (not taking implied returns from the market portfolio), you could lose the stabilizing inverse optimization step ...


Jay Walter's Paper on "The Factor Tau in the Black-Litterman Model" http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1701467 is also useful to review


I don't believe there is one generally accepted method and a number of papers are written on this issue. The Black-Litterman Approach: Original Model and Extensions (2008) by Meucci has an overview and I believe is generally useful to learn more. It suggests using $\tau = \frac{1}{T}$ but notes more complicated approaches exist. A demystification of the ...


There is also http://www.blacklitterman.org/ Where you can find an implementation under Excel and Matlab of the Model.

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