When Vermonter John L. Norris Sr. added Bag Balm to the product line of his Dairy Association Co. back in 1907 or 1908, it's unlikely he imagined, even in his wildest dreams, how popular it would become.

He would be udderly delighted today: Bag Balm, a strong-smelling medicinal ointment created and sold as a treatment for chapped teats on dairy cows, is praised by its human users as something of a cure-all and is on its way to becoming a national institution.

John L. Norris Jr., 71, who took over the association from his father about 1934, is quick to point out that the distinctive green metal container (featuring a cow's head, clover petals and flowers on the top, and her lower chassis on two sides) is labeled with the message: "For Veterinary Use Only."

"That's a legal precaution. We just advertise it for animals, and we say you can put it on your hands. After that we just stop."

The ointment contains a mixture (ratio secret) of petrolatum, lanolin and 8-hydroxyquinoline sulfate, an antiseptic found in various medications, including ones for: hemorrhoids, vaginitis, diaper rash, prickly heat, burns and sunburns, insect stings and bites, dermatitis, pruritic skin irritations, minor wounds and abrasions.

Thousands of customers over the past 77 years disagree with the veterinary-use-only label, and their testimonial letters are kept on file at the association's offices in Lyndonville, Vt. (pop. 2,800), right down the street from the factory.

Among the balm's myriad uses:

* Kayakers, skiiers, saltwater fishermen, outdoorsmen and others, for hands, faces and feet exposed to winds and water and cold.

* A prevention or cure for chapped hands, face or lips.

* An emergency lubricant for machine guns and howitzers in Vietnam.

* To alleviate soreness in the fingers from quilting. To treat "hot spots" and cut footpads on dogs.

* A substitute waterproofing compound for hunting boots.

* To prevent pressure sores on bedridden patients in hospitals.

Adm. Richard E. Byrd's party used Bag Balm on the trip to Antarctica in 1937 to treat frostbite on the udders of milk cows accompanying the expedition.

Dermatologists, says Norris, "write in for it a lot."

Dr. Haines Ely, 39, a Roseville, Calif., dermatologist and former Washingtonian, orders directly from the association. "Patients used to bring Bag Balm in in the 10-oz. tins to me and say how good it was for them."

He handed out the small tins to patients taking Accutane (an acne medication), to counterract its main side effect of "severe chapping and drying of the lips. It worked beautifully and they loved the little tins. They're beautiful and probably will be collector's items at some future date."

Ely says he's never seen anyone allergic to Bag Balm, although he warns, "People allergic to wool should avoid it because of the lanolin, which is sheep fat."

While he won't give out any specific figures ("How high is up?"), Norris says his company sells around half a million tins and pails of Bag Balm every year. The association fills "cash orders" but most people buy it through mail-order catalogues, veterinary supply houses and farm-supply stores. Prices for the 10-oz. tins vary, from $2 to $5.50 and up.

Although there are other effective udder ointments on the market, none has been around as long, nor achieved the people appeal of Norris' product.

When he took over in 1934, the 10-oz. tins sold for 60 cents, retail. The cans cost about 3 cents apiece back then. Although the same tins now go for more than 60 cents each, "We wouldn't change them on a bet."

Except for the antiseptic (changed from a mercury-based medication in 1972), the product itself remains the same. When he receives complaints about its medicinal odor, which dissipates an hour or two after it's applied, Norris responds: "I just write back and tell them that the animals don't mind the smell and remind them it's an animal ointment."

Asked what well-known people endorse Bag Balm, he replies, "The guy that wrote The Joy of Running Dr. Thaddeus Kostrubala likes it for preventing chafing. Because of him we have the T-shirts Balmy Blessing for Runners Too .

"Oh," adds Norris, "there's also a Bag Balm Invitational Golf Tournament out in Washington State, usually in October, and Playboy magazine May 1976 ran a cartoon, and the Smithsonian Institution has a can. In fact, I sent them two. Don't know what they did with the second one."

Charles Kuralt even did a feature on Norris and Bag Balm for his CBS-TV series "On the Road" in 1983. And one woman from Maine wrote that she uses Bag Balm to keep her bed springs from squeaking. "I didn't," says Norris, "pursue the matter."