BANJO DANCING, devised by Stephen Wade with Milton Kramer; with Stephen Wade; directed by Milton Kramer. At Arena Stage's Old Vat Room.

What do you say about a man who, betwen stints of banjo-playing and tall-tale-telling, scampers through a paying audience selling 25-cent ball-point pens and deposits the proceeds in a large, yellow piggy bank?

You say, "That's entertainment."

The entertainer at issue is Stephen Wade, creator, author, star and musical accompaniment of something called "Banjo Dancing, or The 48th Annual Squitters Mountain Song Dance Folklore Convention and Banjo Contest . . . and How I Lost." He and it opened at Arena Stage's Old Vat Room last night and more than met the formidable challenge of trying to follow the Flying Karamazov Brothers with an act of comparable weirdness. After they made Wade, they didn't just break the mold, they smashed it into a million little pieces and buried them at sea.

The pen-selling routine is Wade's occasion for reciting an authentic oldtime pen salesman's street spiel, featuring a money-back guarantee that his pen "writes on both sides of a sheet of paper." American folklore, from the current century and the last, is the principal source of "Banjo Dancing's" material -- implausible yarns and shaggy-dog storeis by mostly forgotten authors and reconteurs, all of whom Wade is meticulously careful to credit. (This is probably the best-footnoted musical revue in show-business history.)

One story concerns two high-divers continually forced to outdo each other -- i.e., dive from a higher platform into a smaller tank of water -- so as to keep their jobs with rival traveling circuses. Ultimately, one of them is diving from a height of 350 feet into a damp bathmat, until his nemesis sabotages the stunt by wringing the bathmat dry, and . . . but we mustn't reveal endings, must we?

Of course, the banjo also figures prominently in "Banjo Dancing." Wade uses three of them -- including one with (he claims) a possum-skin drum. "You can still see the hairs on the inside," he says. He uses the banjo to punctuate his stories, and he uses it to produce music -- everything from the simplest old mountain tunes to a stunning elaboration on "Dixie" in which the fingers of his right hand seem to move so fast they could whip up a plate of meringue in a matter of seconds.

Wade put this show together in his native Chicago, and it comes to Arena Stage after a brief appearance on Broadway. "Banjo Dancing" may not have been suited to a large sit-down theater, but there is something invigorating and noble about so original and carefully crafted an entertainment, and in the cozy confines of the Old Vat Room, with the beer and wine flowing freely, it seems well-placed indeed.