The audience at the Jacqueline de Ribes fashion show at the Sheraton Washington Hotel yesterday was divided into two parts -- those who were willing to show their knees and those who weren't.

There were some heavy hitters on both sides. He'le`ne de Margerie, wife of the French ambassador, was in a Chanel suit that fell inches below her knees. "I have very good legs, I've been told," said de Margerie, who, just the same, gave the mini short shrift. Estelle Gelman, chairman of the American Cancer Society benefit, whose de Ribes suit hem brushed the bottom of her knees, was hesitant to hike her hems any further.

On the other side of the great hemline divide were Katie Clark, a vice president at E.F. Hutton, in a pink jacket costume by Flora Kung, and who now wears everything above the knee; Janet Cam of Le Pavillon, who was wearing a Valentino cropped to the top of the knee; Wilma Bernstein, in a short Ungaro suit; and Mary Pensebene, an editor at the State Department, in a short-skirted Adolfo. Chairman Gelman's daughter, Elise Lefkowitz, was in that group, too, like her mother in a de Ribes suit, but the daughter's style stopped about four inches above the knee.

The audience of 850, mostly women, who raised more than $80,000 at the luncheon, were given the first view locally of what Paris designers have in mind for spring. Short bolero jackets, pouf skirts, sheer fabrics, ruffles and bareness, short evening dresses under long overskirts -- de Ribes touched all bases in her show. The audience applauded generously.

But what they noticed, more than anything, were the short hems. "How can that model sit down?" Gelman whispered as a model in a short, tight, draped navy taffeta dress made her way down the runway.

The best advertisement for short was De Ribes herself, who was wearing a short white knit belted sheath and opaque stretch tights when she took her bow. She subscribes to the theory that shorter, or longer, is better this season. "You don't have to wear skirts extravagantly short like the old days of Mary Quant," said de Ribes before the show, "but below the knee is out of fashion."

Later she added, "Above the ankle or above the knee, those are the choices." If her clothes are especially short for the show, "it's because I was thinking about summer and legginess and wispy insects," said the designer. In fact some of the styles, cut short in the front with a long skirt trailing in the back, suggested the graceful lines of a dragonfly.

De Ribes, without makeup, looking fragile and elegant as a dragonfly herself, arrived at the Sheraton Washington Hotel early yesterday morning for the rehearsal of the Saks Fifth Avenue-sponsored show. She had arrived from Paris the night before and was the first one up at the French Embassy, where she was staying and where a dinner for 60 was given in her honor last night.

The Comtesse de Ribes was far more than designer for yesterday's show. With a walkie-talkie headset and a layout of the show in small sketches in front of her, de Ribes coached the models on how to move and where to stand, and gave instructions about accessories to those working backstage. "The poufs are squashed," she said dejectedly. "Poufs just don't travel well." At one point the leggy de Ribes agilely hopped on stage to pin the petticoat of a pink dress. "When you sit below the runway, you see all sorts of things that you don't see when you are standing next to a model," she said. "Sometimes it is a strong discovery." (Today she will be at Saks to help customers select from her collection.)

De Ribes has also discovered that the work doesn't get easier the longer she is in business. She gave up her relatively calm life as a mother and grandmother and energetic charity fundraiser, living in an antique-filled house in Paris with her international banker husband about five years ago. Now she must check a yearly calendar with her husband to carve out a private life together.

The business has expanded to include a more mass-produced, lower-priced, ready-to-wear line to complement her near couture collection. But she wants to do more. Jewelry. Shoes. Hose. Glasses. She is working on a licensing arrangement in Japan. "I've built the boat. Now I want to put up the sails," she said.

She's getting more organized, and finding more specialized help, to focus on the knits, for example. "Instead of being the femme d'orchestre {one who does everything}, I must become the chef d'orchestre {orchestra conductor.}"

Whatever her role, the audience loved the tune she was playing yesterday. At the end of the show they gave her a standing ovation.