Gerard Elias, lead counsel to the inquiry, showed a video of a British soldier screaming at hooded prisoners which he said was probably filmed during the initial hours of the Iraqis' detention.
The video showed corporal Donald Payne, who was jailed for inhumane treatment in 2007, screaming abuse at the Iraqi detainees as they were forced to maintain painful "stress" positions.
Elias said witnesses had suggested that Payne was trying to restrain Mousa by putting his knee on the detainee's back and pulling his arm back to put plastic handcuffs on him.
The lawyer said: "It has been suggested that Baha Mousa's head was banged on the floor or wall as this was happening."
Pathologists gave varying causes of death for Mousa, ranging from a combination of asphyxia and multiple injuries or asphyxia alone, the inquiry heard.
Payne became the first member of the British armed forces to admit a war crime when he pleaded guilty to inhumanely treating civilians at a court martial in September 2006.
He was dismissed from the army and sentenced to one year in a civilian prison.
Six other soldiers were cleared of war crimes by the court martial.
Elias said the Iraqi detainees claimed the abuse started immediately after they were arrested by British troops at the Ibn Al Haitham hotel six months after the US-led invasion of Iraq.
|Payne admitted inhumanely treating civilians at a court martial in 2006 [GALLO/GETTY]
He said: "Some of them allege that they and Baha Mousa were stepped on when they were made to lie on the floor of the lobby."
Some detainees claimed they were urinated on and forced to lie face down over a hole in the ground filled with excrement, he said.
Detailing other abuses, Elias said: "One man says he was made to dance in the style of Michael Jackson."
The inquiry would also hear "scandalous accounts" of detainees being forced to scream in an "orchestrated choir", Elias said.
Mousa's father Daoud, an Iraqi police colonel, said he hoped the probe would bring "accountability" for his son's death.
The court martial in 2006 heard a claim from a British major that he was instructed to use "conditioning" techniques to soften up detainees for interrogation by those higher up the chain of command.
The procedures included hooding people and depriving them of sleep.
Britain's defence ministry has agreed to pay $4.8m in compensation to the families of Mousa and the nine other Iraqis arrested by the British troops.
Elias' opening statement is expected to take two weeks, and the inquiry about one year.