"ABOUT EIGHT years ago I became interested in portraying what happens inside the character rather than what happens to the character," says puppeteer Luman Coad in crisp, clear tones. "If there's a sin in children's theater, it's that there's no substance -- nothing for the audience to ponder . . . it was a revelation to me that we could do for children's theater what I didn't think was possible."

Coad, who sports a goatee, black framed glasses and curly hair, is a precise man with precise ideas. He has to be. When he spins around on his three-wheeled stool manipulating props and puppets from behind stage, the success of his show hinges on his precision planning and execution.

But last week, after a rehearsal of "The Box" and "Mr. Whipple's Whims" at the Smithsonian Discovery Theater, Coad complained that his timing was slightly off. He was reluctant to reveal what the snags were and waved away his concern. After all, he has performed each show about 450 times and has been a puppeteer since he was 10 years old.

Coad, 40, took the professional plunge into puppetry at a time when it wasn't very fashionable--in 1963, at San Francisco State where he studied children's theater. While in college he became director of the puppet theater at Children's Fairyland--the forerunner of Disneyland--in Oakland, Calif.

Three years later, Coad moved with his wife, Arlyn, to Vancouver where together they started the Coad Puppets of Canada. The shows, elaborate productions staged in major theaters, took six months to prepare for only a three-week run. "Arlyn and I used to have to print and sell the tickets, then slog around town putting up the posters," he remembers with a wince.

In 1971, Coad Puppets began to simplify their shows to reach a larger audience. (The Coads now cut a wide swath through British Columbia traveling in their mobile home to about 325 elementary schools each year.) Although Coad is the star of the one-man show with Arlyn's stamp visible from behind the scenes, "I'm in the supporting role," Coad says emphatically of their equal creative partnership.

Arlyn, a professional designer of miniature wax dolls, designs and makes all the puppets and their costumes while her husband designs the props and tinkers with the gimmicks. But together they write a new show every other year and discuss the concept "through a lot of talking, tears and frustration," Coad says of the team style that has produced 25 shows.

The Coads prefer writing their own material because the audience has too many expectations from traditional stories such as "Cinderella." "The hardest characters of all are a prince and princess," Coad says. "There is nothing," Coad says, gesturing for emphasis, "you can with do with an idealized character."

Both "Mr. Whipple's Whims" and "The Box" are puppet-mime shows. Coad becomes excited and hurried as he describes the theatrical thrill of holding a young audience's attention without using dialogue. "When an audience comes into a mime performance, it is ready to suspend reality. All you have to do is give the children a clue and they will draw their own conclusions."

"The Box" is eight short scenes--each revolving around a different emotion that emanates from the box. Coad will bring such props as a butterfly for the boy (made of plastic wood) or a bone for the dog (made of velvet and yarn in shades of beige) up through a hole in the bottom of the box. The mostly Chopin piano music--selected from an enormous classical record collection at home in Vancouver--keeps pace with every twist of Coad's wrist.

Coad is not only challenged by the technique of mime but also by the theatrical effect of an unusual prop. "I like to see how far I can develop a prop, how many variations can be developed from one object." Because "Whims" is more fanciful, leaving the interpretation open to each child, Coad has created some clever and whimsical props for the bemused and befuddled Mr. Whipple. A dress on a clothesline comes to life when he tugs at a thread from below-stage and an umbrella during a storm turns into a sailboat, a fishing line and life raft.

Coad speaks with pride about a craft he feels doesn't get the attention it deserves. "It's essential to appeal to adults -- they are the ones with the money and the transportation. Children's theater is the hardest format because of that duality and because a child in an audience is not going to be polite if he is bored."

He is amused by the pecking order in children's theater -- considered the stepchild of adult theater. "The actors in children's theater look down on puppetry. So puppet artists," Coad says with a sly grin, "look down on ventriloquists."