When the renovated Circle Avalon theater opens its doors today with an exclusive two-week engagement of Walt Disney's 1940 classic, "Fantasia," it will be the film's second presentation with a digitally recorded soundtrack.

And for the Avalon 1, it will be a first: The theater, on upper Connecticut Avenue, becomes one of two theaters in the nation equipped to present digital sound, which translates music into numbers to achieve greater clarity and dynamic range. (The other, the Plitt Century Plaza in Los Angeles, premiered the digital "Fantasia" in February.)

Improvements in the 63-year-old theater include an 850-square-foot screen, reupholstered seats, a violet and turquoise color scheme, a high-kitsch ceiling mural of a Michelangelo-style nude spinning a reel of celluloid to a cherub, and a sound system that is the most technologically advanced in Washington.

The renovation comes at a time when most theater chains are turning away from big screen presentation in favor of multiscreen complexes of small auditoriums.

"The future of this industry is going to be dependent on providing the public with the most sophisticated and innovative presentation that you can possibly come up with," says Thomas Perakos, chief executive officer of Circle Theaters. "With the advent of the videotape market, we owe it to our patrons and ourselves to make a stand."

The Avalon 2 is to be renovated by September. Perakos estimates the cost of renovating both houses at $500,000.

Besides digital, the Avalon becomes the eighth theater in the District equipped to present 70 mm six-track Dolby stereo. The system is powered by a 10,000-watt Kintek amplifier system and includes a Kintek KT-700 theater sound processor. The Kintek system provides dialogue enhancement and stereo synthesizer functions that separate the elements of a soundtrack -- voice, music, sound effects and background noise -- to provide a monaural soundtrack with something of the fullness of stereo sound. Roughly half of all movies have monaural soundtracks.

The sound comes through three four-way Klipsch HPS-4000 speakers and two additional woofers, flush-mounted behind the screen, as well as 12 three-way Klipsch "surround" speakers mounted on the walls around the auditorium. The array was computer-designed by John Allen of Klipsch to provide maximum uniformity of coverage -- as much as possible, there are no "bad seats" in the theater.

There are some detractors. William Mead, an engineer for Dolby, calls Kintek's claims of stereo enhancement "just garbage." "They would say that," says James Townsend, Kintek's engineering manager. "They don't have one." Most, however, agree that the Klipsch/Kintek combination is one of two state-of-the-art sound systems (the other being Lucasfilm's THX system).

Those who heard the new "Fantasia" in a benefit performance for the National Symphony on Wednesday were pleased. "It's really excellent sound," said Andrew Litton, the symphony's assistant conductor.