With wit as sharp as their X-acto knives, the six gifted local artists now showing at the Corcoran apply to their pictures dollar bills and Durers, wallpaper and window screens, maple leaves and Band-Aids. Their elegant, amusing show should help erode a prejudice: Cut-and-pasted pictures have for too long been dismissed -- even by collagists as confident as these -- as a lesser form of art.

Collage gets a burn rap. "It's not right up there with painting," says one of them, Jim Sundquist. "It's similar to the difference between a short story and a novel," explains his colleague, Richard Lutzke," "Collage," adds Allen Appel, "is still considered a bastard art form." Appel may be right. Art snobs still dismiss the cutouts of Matisse as thinner than his oils. They view those of Picasso as mere curiosities. Collage, such bigots feel, is fine for dada zaniness, but for little else.

That bias may be fading. Collage, in this exhibit, seems a form of art just right for the '80s. Its time has at last come.

Its quick-cuts and mixed-messages distress the eye no longer. Its discombobulations, seen as arbitrary once, now appear to mirror the look of Real Life. We live in jumbled times. Our songs are over-dubbed, our television screens emit a stream of images -- old film, new ad, news report -- that is sharply discontinuous. The viewer of the '80s is blitzed by information. In a city rich with galleries, and art of every sort, he who views a painting does so while recollecting a thousand other pictures: To look at art today is to compose in the mind a detailed and personal memory collage.

Countless are the memories -- of rabbits and the Renaissance, of cubes and Amish Quilts, "The Heart of Juliet Jones" and the woodcuts of Japan -- summoned by these pictures, yet this show is not garbled. Though it touches many bases, its look is crisp and clean.

The exemplary collage depends on grace and balance. Each separate component must be allowed to breathe, must calmly coexist with others quite unlike it -- or the picture flies apart. What is needed is a special sort of visual politeness. The artist, like some gracious host, must choose high guests with care, place them with discretion and choreograph the party so that each individual contributes to the whole.

That requirement is met by each of these six artists. They are: Allen Appel, Raya Bodnarchuk, Rebecca Kamen, Dale Loy, Richard Lutzke and Jim Sundquist. Their pictures very greatly. Their show is at once shy and bold, somber and amusing.

Appel's theme is death. His colors here are limited to mourning black and white. "I have hundreds and hundreds of books," he tells us in the catalogue. "I sat for about a month and cut up all my books. I cut out the pictures that I thought had anything at all to do with death . . . and began combining them in various ways . . . The challenge of this project was to try and make them either funny or mysterious or disarming. The impetus came from the concept of 'How many Indians can you find in this picture?' or 'What is wrong with this picture?'"

Appel's layered art is dense with antique ghosts. Alice out of Wonderland greets a baby on a salver; the four horsemen of the world's end are accompanied by sharks; Saint Louis, on his deathbed, appears to be praying to the giant butterfly hovering overhead. Appel pictures tell us strange, affecting stories, stories we can read but cannot quite explain.

Jim Sundquist's laminated pictures are quiet in their colors, esthetically ambitious, delicate, precise. Sundquist shows us chickens, blueprints, comic strips, flowers and Mount Fiji, but his pictures, much like Rauschenberg's, do not relate stories, except by implication. They are meditative objects. He makes first-rate abstract art.

The friendly, courting animals, the horses, snakes and fish dancing in the art of Raya Bodnarchuk are brought alive by singing color. She has learned much from Matisse and from quiltmakers as well.Her work is full of joy.

After momentary double takes, Richard Lutzke's viewers laugh aloud. His "Sewn Oats" is a little field painting of oats sewn down to paper, his "Graft interweaves a maple leaf and a dollar bill; his "Woven Paint" is woven paint; a page torn from a score has been cut and reassembled for the picture he calls "Noise." Joke art's life is brief, one tries of it quickly, but Lutzke's elegant and well-made puns bring brightness to this show.

Rebecca Kamen's pictures add a note of mance. The colors she prefers, blacks and steely silvers, are those that bikers love. She shows us metal nets, dark squares, spear-sharp triangles.Kamen's small collages -- she calls them "studies" for her sculpture -- are a bit academic. It is difficult to see how they would retain what small power they possess were they larger than they are.

Of the pictures in this exhibition, those of Dale Loy are the most familiar. Our memories of better, older works, by better, older artists -- Kurt Schwitters, Anne Ryan, Irwin Kremen -- do damage to her subtle abstract pictures. It is not that they are ugly; they are sensitive enough, but they set out to solve problems that have been solved before.

All the artists here claim to work in other media, in painting and photography, printmaking and sculpture, as if being a collagist were somehow insufficient. If their other works of art are better or more serious than those in this exhibit, they must be very good indeed.

This show is in a small way politically important. In Washington, of late, the Corcoran's commitment to fresh local art has elicited much grumbling, grumbling that this show, with its illustrated catalogue and handsome installation, should do much to assuage. It was organized by Clair List, a curator employed there to exhibit local art. "Collage on Paper" is her finest show so far. It closes July 5.