The self-proclaimed artist stood in the street, with one ear painted cobalt blue and the other, canary yellow. He was watching a group of actors performing a piece called "Leatherman: The King of Dupont Circle" atop a picnic table. All around were artists and admirers, wearing their clothing either very loose or very tight.

It was the Washington Project for the Arts' first annual Art Party, reminiscent of Haight-Ashbury or Greenwich Village in the '60s. Some say great art is born of adversity, and the heat and humidity seemed to bring out the creativity in everyone.

More than 400 artists and friends of the WPA attended the bohemian bash that included performances and food. The party's real purpose was to say farewell to outgoing WPA executive director Al Nodal and to raise funds for WPA programs.

"I really feel strongly that no one should run a place like WPA longer than five years," said Nodal, who, after five years at WPA, leaves for Los Angeles next month to take charge of the Otis Art Institute of the Parsons School of Design. "WPA is all about constant change, and nobody can keep up with that all the time, you need fresh blood.

"Now I'm mostly excited about working with the artists in L.A.," Nodal said. "We've shown many of them here, and we hope to continue an exchange of art and ideas between L.A. and Washington."

Onstage, Nodal was presented with balloons, showered with confetti, and serenaded by the crowd with "For He's a Jolly Good Fellow." Hovering high above the performance stage was artist Vera Simons' sculpture "Squadron"--seven orange, spaceship-shaped balloons, constructed especially for the street party.

Mayor Marion Barry broke away from his son Marion Christopher's third birthday to proclaim yesterday Washington Project for the Arts Day. "We talked about Seventh Street being an arts corridor, a cultural district in our city," said Barry, cheerleading with the crowd and calling WPA "a national model--an international model for the arts," and the street party a "great big love-in."

"During these days, when this government is spending more money on bombs than babies, on missiles than milk, that's when we need the creativity to come out, don't we? We need the driving force of our artists," Barry said to cheers.

"I don't think some of these people locally really appreciate yet what a leadership role WPA has taken in this country," said incoming executive director Jock Reynolds, a visual artist who has taught for the last 10 years at San Francisco State University.

Reynolds said he plans to emphasize new work in video, poetry and music, and increased dialogue between artists and audiences. "Artists are often seen as frothing-mouthed misfits, and that's a misrepresentation. You should hear them when they talk about their art, as well as see it."

Joy Silverman, Nodal's wife who was an assistant director of the WPA for three years, came in from Los Angeles, where she is director of Los Angeles Contemporary Exhibitions, an artists' space similar to the WPA.

Silverman wore a turquoise shirt reading, "I LOVE AL NODAL: He's My Husband," made for her by artist Suzanne Codi, who designed special Nodal buttons for the night.

The guests feasted on a colorful picnic of barbecued chicken and ribs. Those who weren't eating or talking art and money browsed through artists' booths, set up especially for the party, where one could purchase--at bargain prices, one was assured--photos, paintings, sculptures and many unidentified esthetic objects, including Stewart Schmatback's "Untitled," a framed piece of brown cardboard bearing the rubber-stamped legend, "This is not art."

The hottest-selling item seemed to be the Al Nodal buttons, with Nodal's image washed with bright colors, a' la Andy Warhol.

Much of Washington's arts community attended, including such well-known people as painter Sam Gilliam, printmaker Lou Stovall, sculptor Jim Sanborn and painter Leon Berkowitz.

"I remember when you couldn't get 100 people together in the arts world," said Berkowitz. "Look at this huge crowd! This thing has so much steam now it's bound to keep going."