When I called and talked to ATF, I was told that it IS legal, but there were a LOT of stipulations involved that could easily make this a very fine line to walk. It seems like it would be much easier in the long run to just buy it, even though I think it would still be good to know how to make it if needed. As to the stipulations, the major one was that it had to be for your own personal use in a muzzleloader, which is fine by me. Here is the catch. Say I'm at the range shooting my ML with powder I made (not that I would), and one of you walks up and asks to shoot it or borrow some powder. If I let you fire a shot, or borrow some powder, or anything else where powder i made changes hands for whatever reason, I am now guilty of making/selling/transferring/etc an explosive without a license to do so. They said that the way to get around that is to have everyone who may shoot said powder be involved in the manufacture of it, but that still sounds like a hassle to do, and then you have the recordkeeping requirements if you wanted to prove who was present, who paid for what amount of what component, who got how much powder, etc, etc. I'm not going to tell anyone not to make their own as long as they do it safely, but I would suggest that anyone who considers this call ATF and get their own answers before taking a risk. Even in this one thread, we have a post above where one poster got a different answer than I got, so who knows which agent is right or wrong, or which agent will be making the decision if any of us does this. This is after all the internet so do your own checking before trusting your freedom to me or anyone else please.
Now to their credit, the agents I talked to were both very professional and courteous. The first said he didn't know, but transferred me to someone in the "explosives branch" who gave me the answer that "yes it is legal for muzzleloading or other cultural, but here are the stipulations..."