To reiterate what MJB has said all the info I have seen and read says that prospecting is open pretty well anywhere along the creek 200 meters downstream of Woolshed Falls basically right through to Eldorado. I have even spoken to the local Beechworth Parks team about prospecting and at no stage did they ever say prospecting is not allowed.
My information I have gathered or been told to this point says upstream of the falls is not open for prospecting as is the base of the falls and 200m downstream from the base of the falls.
In fact any given weekend you can find literally dozens of people prospecting along the banks of the creek. Head across that way in the warmer months during school holidays and you'll find nearly every track off Woolshed Road with campers on it out on the creek trying their luck.
But as many pointed out the FAQ on the Vic Miners Right has Reedy Creek listed in the exempted zones. Confusing to say the least. I have personally made contact with both DEPI and Parks on a numbers of occasions in relation to other creeks around Vic which both departments have helped with information for the purpose of prospecting even though they appear on the exempted list.
I personally prospect at Beechworth \ Eldorado regularly and know of quite a number of others who do to, most of whom are local to the area but also a few that have to make a trip of it like I do, I've spoken to some people who are very heavily involved in the recreational prospecting industry who have and also recommended that area as a good place to go, the Beechworth Tourist Info center also says that prospecting is allowed, so the fact that it appears on the exempt list is very confusing. I am even aware of some gemstone and fossicking clubs that do club field trips up to Reedy Creek. My assumption would be that surely prospecting on Reedy Creek within the "known" permitted area must be legal as how could so many clubs, bodies and organizations believe otherwise to the contrary of what appears to be the case in the Miners Right list of exemptions.
It'd be nice to get an official clarification from DEPI or Parks or someone.