THERE'S a saying in Hollywood: You can never be too rich or too thin or have too many Muppets.

And now, those adorable hairballs are pulling our strings again in the amazing "Labyrinth," with its human and latex cast. Director Jim Henson -- with the help of producer George Lucas' special effects -- turns this irreverent fairytale into the happiest fantasy since "Time Bandits."

"Labyrinth," like "Bandits," is written by one of Monty Python's old crew. Terry Jones pens the plucky screenplay -- based on a growing-up parable by Henson and Denise Lee -- with a special kind of insanity. It's almost a Muppets Flying Circus, with at least one character straight out of "Holy Grail." He's the fox-faced, squirrel-tailed Sir Didymus, who's every bit as indefatigable as the Grail's impossibly gallant knight. His job is to guard the bridge across the flatulent Bog of Eternal Stench.

Didymus joins heroine Sarah (a human) and her small band of Henson-ettes on their quest to find Sarah's brother. They have to navigate the Labyrinth, a magical maze of glittering cobwebs and talking moss. The fantastic tangle disguises the entrance to the Goblin King's Castle, where baby brother Toby is captive.

Sarah is kin to Alice, as in Wonderland, and the landscape here is just as riddled with dangerous whimsy. In the Labyrinth, "things aren't always what they seem" -- just like adulthood, with its bewildering twists, blind alleys, dead ends and rights of way.

David Bowie, who composed five songs for the movie, stars as the compelling, sexually menacing Goblin King. Bowie's rowdy subjects snuggle baby to their wrinkly, crinkly goblin faces, and nuzzle him with their horns. Like the critters of "Dark Crystal," you wonder if they don't just come to life when the Muppet factory shuts down at night. There are animated door knockers, a flock of "Fireys" who love nothing better than to take off their heads and dance, crystal balls and shattering dreams spirited from thin air by the Lucas Light and Magic team.

Sixteen-year-old Jennifer Connelly is the ingenue, a resourceful young woman with a wonderful imagination, great courage and a healthy case of sibling rivalry -- which is what got her into this mess, after she wished her baby brother away to the waiting Goblins. (She had to babysit.) Her companions in her quest include Ludo, a huggable lug of an orangutan, and Hoggle, a cantankerous gnome with a nose on the order of Karl Malden's and a hardened heart that, of course, harbors gold.

But these characters are no Disney dwarfs. When Sarah leaves her child's bedroom for the castle, she sees Hoggle for the first time, gaily zapping pesky fairies with DDT. "Labyrinth" is never coy and always surprising, an inventive enchantment that hides its high technology and leaves you as wide-eyed as a child, if you aren't one, and maybe a little wiser if you are. -- Rita Kempley.

LABYRINTH (PG) -- At area theaters.