First of all it is important to understand that we have to have a certain amount of discrimination, that we can't let go of all judgments. Often people believe that compassion means that we have to get rid of all our judgments, but we don't want to get rid of our Wisdom. So it is a matter of seeing what is a judgment and what is a prejudice as there is a difference.
Prejudice pre-judges something without investigating into it and seeing the truth of it. The prejudicial opinions will often just be coming from our past perceptions and what these things have meant to us in the past and forming hasty conclusions. Judging people or things on surface appearances, incomplete information and how we have been conditioned to believe things should be.
But judgments based on wise discrimination, based on investigation into things, seeing the truth of things, whether it is beneficial or unbeneficial, this is different to prejudice. An example can be found in the Rahulovada Sutta. Here the Buddha talked about before we do something to investigate, does this lead to my own affliction, to the affliction of others or the affliction of both? Is it a skillful action bringing happy consequences, happy results? If we believe that something will bring beneficial things and bring happy results, then we can go ahead with doing such things.
Within this kind of reflection there is a certain amount of judgment, judging our own actions and thoughts. And in the same way in the Fourth Foundation of Mindfulness, the Buddha talked about investigating into the hindrances, internally and externally. That is, when we see the hindrances externally in others, we acknowledge that they may be having aversions, that is a certain judgment coming for our own understanding of aversion. That doesn't mean that we hate the person. It just means that we understand that they are lost in an unskillful emotion, they are doing an unskillful action, we see the unskillfulness clearly as it is, but we have compassion for the person doing it. So there is a difference between judgment and prejudice.
Often prejudice comes from fear, fear of something that is not known to us, fear of something different. So in order to deal with prejudice we have to learn how to look at our fear. That is learning how to note when it is there, learning to see how it makes us feel, learning how to have compassion for ourselves and learning how to universalize it by investigating into how much suffering arises from fear and prejudice in the world. This will help compassion to transform it.