I believe there's nothing in the Blogger Terms of Service that states about favicon restrictions, not even template restrictions. You may read the terms yourself. I might have missed something. But even a keyword like "icon" or "template", I could not find any when I tried to search it.I have tried to search it in Google also but I could not find any result that states about these kind of restrictions in blogger. All I can see are words about adding favicons to blogger or perhaps animated favicons for blogger.
Though I have found one post where it said that blogger did not allow, but was because he made it wrong that resulted to an error and then concluded it was not allowed. Don't be deceived immediately the the things you've read. As I have said, I might have missed something, so read the terms yourself.
If you want to learn how to change your favicon, you better start reading "how to change favicon in blogger".
If Blogger really doesn't allow things like this one, I believe there are remedies they have made in their system or perhaps should not allowed us to have full control to out templates.
