Put 1/2 cup plus 1 teaspoon warm water in the bowl of a stand mixer. Sprinkle the yeast into the water and stir to dissolve it, then stir in the molasses. Set the mixture aside until the yeast activates and looks creamy, about 10 minutes. Add the bread and rye flours, sparkling water, diced butter, and kosher salt. Mix together with the paddle attachment, then switch to the dough hook and knead the dough until it is no longer sticky, 5 to 7 minutes. Grease a large bowl with butter. Transfer the dough to the greased bowl, turn it over to coat all sides, cover with plastic wrap, and refrigerate overnight.
Preheat the oven to 300°F. Line a rimmed baking sheet with tinfoil, then spread the baking powder in an even layer and bake for 1 hour. Cool the baking powder completely. (The roasted baking powder can be stored in an airtight container for weeks.)
Turn the dough out onto a lightly floured work surface. Flatten it into a square about 8 × 8 inches. Using a pastry cutter or sharp knife, cut the dough into 10 equal- size lengths each about 4/5 inch wide. Working one at a time and keeping the remaining dough covered with a damp cloth, use your hands to stretch and roll each dough length into a rope about 26 inches long.
Cut each rope in half, rolling the ends a little to taper them. Again, working one at a time, form each rope into a U shape, gently stretching as necessary to maintain the length. Lay the rope on the floured surface with the ends pointing toward you. Lift the ends, twist them together once, then separate them again as you draw them up and press firmly to attach them at the top of the pretzel loop knot. (For pip- squeaks, stretch the dough into fourteen 18-inch ropes and cut them into 1-inch bites.) Butter two baking sheets and two large pieces of plastic wrap. Put the pretzels on the baking sheets, cover them with the plastic wrap, and set them aside to rise at room temperature until they have increased in size by half, about 15 minutes (pipsqueaks will be sufficiently proofed in about 10 minutes).
Preheat the oven to 425°F. In a large pot, combine the roasted baking powder with 8 cups water and bring to a boil. Reduce the heat to maintain a simmer. Set up a rack (or line a baking sheet with towels). Working one (or two) at a time, drop a pretzel into the simmering water for 10 seconds, turn it over, cook for 10 seconds more, drain with a slotted spoon, and then dry the pretzels on the rack for at least 5 minutes.
Return the boiled pretzels to the buttered baking sheets. Brush them with beaten egg and sprinkle with mixed seeds or sea salt. Bake for 7 minutes, then rotate the pans front to back and bake until the pretzels brown, about 8 minutes more (cook pipsqueaks for about 10 minutes). Serve warm or at room temperature.