As late as Nov. 3, the race for Time magazine's 1979 Man of the Year was too close to call. Running neck and neck were Pope John Paul II, who was at the height of his popularity in America, and Ayatollah Ruhollah Khomeini, who distinctly was not. The turning point came on Nov. 4 when Iranian students took over the United States Embassy in Tehran and made hostages of all those inside. From that date on, the race was over.

"Khomeini was real strong even before the embassy takeover," said Ralph Graves, editorial director of Time Inc. "He had brought off the big revolution of the year, overthrown the shah and disrupted the entire Middle East and the oil supply. But the pope had a lot of support as well, and we were even thinking of the refugees, the boat people, though generally we like to have a specific person.

"When the embassy takeover happened we all, at that point, thought Khomeini had to be it. The point was brought up that it would be unpopular with our readers, and we acknowledged that. But the definition of our Man of the Year is the person who has had the most effect on the news -- for better or worse. I guess you could say we were sort of forced into choosing Khomeini by our own feeling that he's so much more the news figure of the year."

That's why Khomeini's portrait is staring out at you from this week's Time cover.

Time has a weekly circulation of some 4.25 million. In Time's corporate headquarters in New York City yesterday a public relations spokesman, Brian Brown, said that as of 4 p.m. the switchboard had received more than 220 telephone calls concerning the choice of Khomeini as Man of the Ear. "All have been negative," Brown said. "It's our feeling that people are reacting to the cover photograph. Our hope is that they'll read the magazine. The article speaks for itself." Brown said that some of the callers have threatened to cancel their subscriptions. "A lot say they will," Brown said. "How many do? I don't know."

Graves felt that the pope would have been a more popular choice, and he said "there probably will be some cancellations of subscriptions. People will automatically assume that we are applauding Khomeini, or that we are giving him recognition he doesn't deserve. We aren't. We simply have to pick for better or for worse. In the past we've selected Adolf Hitler and Josef Stalin. We've picked for worse, and we've picked for better. But people don't remember that."

The procedure to select the Man of the Year routinely begins in the fall when the editors invite nominations from all staffers in all bureaus. Those nominations are tabulated and some of the most senior editors then discuss who should be named. Time began its annual selection in 1927, naming Charles Lindbergh.

Other recent selections have been Deng Xiaoping (1978), Anwar Sadat (1977) and Jimmy Carter (1976). In 1975 it was "Women of the Year," in 1974 King Faisal, and in 1973, Judge John J. Sirica. Richard Nixon and Henry Kissinger shared the title in 1972. Stalin was Man of the Year twice, in 1939 and 1942, while Hitler was chosen in 1938.

This year, after the nominations were in, there were a series of three or four meetings in late October. Graves had been at them, as had Henry Grunwald, editor-in-chief of Time Inc., and Ray Cave, managing editor of Time. Various senior editors and assistant managing editors had been at one or more of the meetings, and Cave had some other meetings with members of the Time magazine staff. But in a meeting following the takeover of the embassy, there was a clear consensus.

Bruce van Voorst, one of Time's correspondents in Iran, had long before requested an interview with Khomeini. Ironically, soon after the decision was made to name Khomeini the Man of the Year, the request was granted. At the time, according to Graves, Khomeini did not know of the choice. Within 24 hours of the interview, which is recorded in Time, Van Voorst and Rolland Flamini, another Time correspondent in Iran, were told to leave that country by the minister of national guidance. Khomeini, who was told that he had been named Man of the Year during the interview and showed no visible reaction to the honor, did not intercede to allow Time's correspondents to remain in Iran.

"We were kind of amazed that we got the interview, and that at the same time Van Voorst was told to leave the country," Graves said.

Were you at all nervous, Graves was asked, that Khomeini would tell people he was chosen Man of the Year? That he would, in effect, break the release date on your biggest story of the year?

"No. First of all, you can't put the selection in some sealed envelope and open it like the Academy Awards," Graves said. (Of course, Time does send its editors the Man of the Year proofs in plain brown envelopes.) "It's a 21-page package. Some people have to know. And anyway, Khomeini, I think, doesn't care very much what other people are doing. He seems to be very much self-satisfied."