IN 19th-CENTURY Persia, now Iran, teahouses were popular gathering places after work. Customers would drink tea, often flavored with sour cherries, and smoke hookahs or water pipes. If they wanted cooked food, there was simple fare, stew and kabobs.

Sometimes folk musicians entertained, but above all there were the storytellers, who used as storytelling devices some very unusual rugs that were hanging on the wall. They were rugs woven with the glorious images of kings, heroes and beautiful unveiled women -- very different from the standard Persian rug with medallions and geometrics.

These flying carpets of imagination are the subject of a traveling exhibit at the Textile Museum, "Kings, Heroes and Lovers: Pictorial Rugs from the Tribes and Villages of Iran."

The trade considered such carpets to be mistakes, inappropriate for commerce. Instead, the carpets were made for private use, in the home or the teahouse or the chieftain's palace. The carpet maker could express herself freely, rather than having to weave 10 or 20 identical rugs on order. Perhaps that explains the joyous playfulness of these pictorial rugs.

In the early 19th century, oil painting was so rare in Iran that these rugs were inexpensive substitutes. With oil paintings in short supply, chieftains would commission carpets woven with favorite subjects. And while storytellers at teahouses in the cities would have paintings to refer to, the village storyteller just had a rug.

Not that that would stand in the way of an expert yarn weaver. Like soap opera script writers, the great raconteurs would know just when to stop to bring the customers back the next day.

So the teahouses were always full, especially toward the end of a story, says Parviz Tanavoli, an Iranian sculptor who is curator of the show. "In the teahouses then, there would be no place to throw the needle where it would come to the ground, as we Persians say," Tanavoli explains.

Standing for the triumph of good over evil, the hero Rostam was a favorite subject, and he appears in at least three of the 30 rugs here. You know him by his characteristic split beard and his leopard-skin tunic. Wearing a helmet made from a demon's skull and carrying a mace topped with a bull's head, he's a typical folk hero.

From private Iranian collections, several of the rugs displayed here capture an exquisite moment in a story. And so in one carpet, surrounded by the traditional border of the village where it was woven, Rostam, the hero of Iran, is about to confront Sohrab, the hero of Turkestan. Here, just before their battle to the death, they sit side by side, neither knowing the other's true identity. The younger Sohrab resembles Rostam, but not because of any lack of imagination on the part of the rug weaver. At the end of the battle, with his last breath, Sohrab says his father will avenge his death -- his father, the great Rostam.

The well-loved stories have held up as well as the rugs. So while the show is here, the Textile Museum is doing its part for the oral tradition by offering storytelling programs in both English and Farsi, using the rugs as conversation pieces. KINGS, HEROES AND LOVERS: PICTORIAL RUGS FROM THE TRIBES AND VILLAGES OF IRAN -- At the Textile Museum, through August 17, circulated by the Smithsonian Institution Traveling Exhibition Service. Storytelling programs by reservation only: Saturday at 2, for children (in Farsi); June 7 at 2, for children (in English); June 11 at 6, for adults (in Farsi); June 25 at 6, for adults (in English). Phone: 667-0441.