The fierce battle of words over the Vietnam Veterans Memorial may at last be over. Better still, the story may have a happy ending.

One last hurdle remains in the long, tiring race for Jan Scruggs and the other members of the Vietnam Veterans Memorial Fund. That is the March 3 meeting of the National Capital Planning Commission, which will be asked to do precisely as the Commission of Fine Arts did yesterday--namely, to approve specific positions for an American flag and a traditional statue of three American infantrymen at the memorial site in Constitution Gardens.

Yesterday's decision was admirably clear-headed. The Commission of Fine Arts, presented with three locations for elements to be added to the already impressive memorial, chose to cluster them as part of an entranceway to the memorial. In all ways, this was the best of the three alternatives. Here's why:

The crucial tests of any significant work of art that exists in public space--and make no mistake, the Vietnam Veterans Memorial is art of very high order--are the kinds of relationships it establishes with the surrounding environment, and the nature of the bonds between its component parts.

About the first order of relationships there is no longer any need to guess. We now know just how stirring was the vision of the young Maya Ying Lin, whose simple design for a long, open V-shaped memorial won a national competition. The memorial was dedicated on Nov. 13 and has been visited since by more than a million people.

The site itself, a glade surrounded by trees with views toward the Washington Monument and the Lincoln Memorial, is a splendid place both physically and symbolically. Lin's walls, rising from the ground to reach a height of 10 feet at their intersection, and set on a perfect axis with each of these imposing national monuments, fit perfectly into the place.

They complement, rather than compete with, its natural beauty and symbolic resonance. As called for in the requirements of the competition, the walls with their tens of thousands of engraved names are "contemplative and reflective in character" in extraordinary measure.

The second issue, the question of relationships between parts of the memorial, was raised when the Vietnam Veterans Memorial Fund, compromising with opponents of Lin's design, agreed to add the flag and a statue to the piece. Precisely where they are to be placed is what the fighting has been about.

One proposal, favored by the opponents, was to place Frederick Hart's sculpture of the infantrymen in the open glade approximately 170 feet from the point where the two walls meet. In this version the flag, on 50-foot-high pole, was to be set atop the walls, about 40 feet from and directly behind the vertex.

J. Carter Brown, chairman of the Commission of Fine Arts, yesterday explained the esthetic deficiencies of this scheme. Thus exposed, he said, the statue would be seen only in a constantly shifting relationship to the walls, and the view of the flag would be cut off as visitors neared the walls themselves. This is no way to treat the American flag nor, symbolically, is it any way to treat a superb memorial. Put together in this way the three elements (flag, statue and walls) do not harmoniously coexist. Their relationship is one of extreme ambiguity if not outright hostility.

Some of those who supported this approach view Lin's design as a funereal affront to their service in Vietnam. The revision, they believe, reads like a story in which the bronze soldiers look across walls symbolizing the "tragedy of the war" to a flag signifying their patriotism. Besides being arguable, this interpretation tremendously limits the open-ended range of meanings that is one of the beauties of Lin's conception.

Other objections apply to an alternative advanced by the American Institute of Architects. This proposal called for locating the flag at an entranceway to the west of the memorial along Henry Bacon Drive, and the sculpture far inside the grove of trees that separates the Vietnam Memorial from the Lincoln Memorial. In this scheme the elements may truly be said to have almost no relationship to each other; justifiably it received no serious consideration.

These deficiencies are handsomely redressed in the third proposal, favored by the VVMF and chosen by the Commission of Fine Arts. In this design, worked out by Kent Cooper (the architect of record for the memorial), landscape architect Joe Brown and sculptor Hart, the flag is to be placed at a new intersection of the pathways surrounding the memorial, inside a copse of trees. The sculpture is to be located some 35 feet from the flag, at the very edge of the trees.

The great benefits of this plan are two: It best respects the powerful presence of the memorial walls, and at the same time it gives the sculpture and the flag the added weight they need to stand up to the walls in some kind of meaningful visual relationship. As Carter Brown pointed out, both flag and statue are almost preposterously small when compared to the walls. And as Joe Brown said, the canopy of trees will form a "soft, ushering outdoor room" for both flag and statue--just what is needed.

Yesterday's action left a few potentially troublesome issues undecided. There are proposals for many added walkways, mainly to increase access for the handicapped. Everyone concerned with the documented beauty of the memorial should, as Carter Brown said, "look very carefully" at any and all paving schemes for the place. And then there is the question of lighting at night, which presents enormous practical and esthetic problems to all aspects of the memorial.

Nonetheless, the Commission of Fine Arts yesterday acted wisely and courageously. Should the planning commission follow suit, by year's end we could have a completed memorial of which all Americans can be truly proud.