The pretzel originates in Germany, where it is called Laugenbrezel. It was originally prepared in a alkali solution, which is where the "Laugen" part of the word comes from; typically, lye was used, but baking soda gets you most of the way there without a trip to the pharmacy (a Mexican or Asian market may do the trick if you want culinary lye).
The alkali solution is what causes the crust to brown so deeply, and it's most of the difference between a pretzel and a bagel. A bagel would typically be boiled in a malted sugar solution instead. The flavor is also affected, but I don't know how to describe the difference; there's a very pronounced aroma difference if you skip this step. To me, you end up with nothing more than a pretty breadstick unless the dough gets that alkali bath.
If you do use culinary lye, use gloves and don't rush anything. Traditional Laugen aren't boiled, so you just need a cool 3% lye solution; no boiling step.
In Germany, the pretzel shape isn't the only option for Laugen. Little rolls calls Laugenbrötchen and longer, roughly baguette-width sticks called Laugenstangen are also popular. On my most recent trip last year, the Laugenstangen were frequently sold in the form of sandwiches, though I don't remember seeing many of those when I was first living there in the mid-90s.
ETA: Having done this a few more times since originally posting, I'd also add that the utensils you use in lye-based pretzels need to be wood, glass or plastic. Eye protection is important too. Metal will likely corrode or oxidize when it contacts food put in contact with lye, even if it's after the wash. I'd recommend setting the washed pretzels on a wooden surface after dipping if you want to minimize damage/discoloration on your baking sheet.
Harold McGee tackled alkaline noodles a while back. He found that baking baking soda actually changes it from sodium bicarbonate to sodium carbonate. This is a reasonable substitute for the kansui called for in alkaline noodles and can be substituted 1:1 in recipes. The noodles may not get AS yellow as they would with both alkalines present in kansui but it's a small price to pay for not having to hunt down that ingredient.
http://www.nytimes.com/2010/09/15/dining/15curious.html?_r=0
The key part:
Just spread a layer of soda on a foil-covered baking sheet and bake it at 250 to 300 degrees for an hour. You’ll lose about a third of the soda’s weight in water and carbon dioxide, but you gain a stronger alkali. Keep baked soda in a tightly sealed jar to prevent it from absorbing moisture from the air. And avoid touching or spilling it. It’s not lye, but it’s strong enough to irritate.
Best Answer
No, you cannot use baking powder to dip pretzels. To get their characteristic color and crust, pretzels are traditionally boiled in lye. Another alkaline solution, i.e. those containing a base, can be used as well. Let's look at how baking soda and powder are used as leavers:
Baking soda is a base (namely sodium bicarbonate) that releases carbon dioxide gas when mixed with an acid. That's why, in a recipe like buttermilk pancakes, acidic buttermilk can mix with baking soda to produce bubbles of gas that leaven the pancake.
Baking powder is a mixture of baking soda with a dry acidic substance. When mixed with water, it makes carbon dioxide gas all by itself.
Baking powder mixed with water will not be alkaline, since it contains both an acid and a base. Thus it won't work for boiling pretzels. Unfortunately, there aren't very many bases in your kitchen cabinets. While it is easy to substitute acids, the only bases you are likely to bake with are lye and baking soda.
If you skip the dipping step entirely, you will get plain rolls instead of pretzels. Boiling in plain water, or water with honey or barley malt syrup, will give you a more bagel-like crust. But to get a true pretzel, you really must boil in an alkaline solution.