The legacy of the Rev. Martin Luther King Jr. was celebrated with passion and reverence at an Israeli Embassy reception yesterday. Rep. John R. Lewis (D-Ga.) recalled his days with King in the civil rights movement. "His method was creative nonviolence," Lewis said, but nevertheless "people gave their lives." Israeli Ambassador Moshe Arad spoke of King's "unquenchable hunger for freedom and justice."

But there were undertones of tension and sadness at the reception. For weeks Israel's occupied territories have been filled with rage and death. The Jewish state is under international fire for its harsh measures in clashes between the Israeli army and Palestinians. More than 30 Palestinians have been killed. While Arad spoke yesterday of "the age-old Jewish passion for justice," he did not fail to slip in his political point, too: "our reverence for the law."

Outside the embassy, representatives of the Arab American Institute held aloft a banner that said, "Dr. King Taught Non-Violence and Justice, Not Occupation and Repression." In a planned act of civil disobedience, four were arrested for demonstrating too close to the embassy and failure to disperse. The Arab group was joined in its protest by the Jewish Committee for Israeli-Palestinian Peace, a Washington activist group.

Coretta Scott King, the widow of the slain civil rights leader, who was in town yesterday to attend several commemorative events, failed to appear at the Israeli reception -- a decision Arad said was made weeks ago. She issued a written statement yesterday to "deplore the violence" that has brought death to Palestinians in the Gaza Strip and on the West Bank. "I also deplore the human misery and hopelessness of the Palestinian people who live there," she added in the statement.

Mrs. King went on: "The Palestinian people have a right to protest for their full human and civil rights, just as the state of Israel has a right to protect its security. It is my hope that both Israeli and Palestinian leaders will accept Foreign Minister {Shimon} Peres' proposal for an international peace conference, as well as the mediation of the United Nations."

She quoted her husband, who once expressed his belief that "wounded justice, lying prostrate on the blood-flowing streets of our nations, can be lifted from this dust of shame to reign supreme among the children of men."

Asked about this statement at the reception, Arad said that "she's expressing her fervent hope and desire to see a peaceful result. We hope that this will become a reality." He said Mrs. King, who was the honored guest at last year's reception, was "present here in spirit" yesterday.

A spokeswoman for the Martin Luther King Federal Holiday Commission, of which Mrs. King is the chair, said Mrs. King was not boycotting the Israeli reception. "She did not have time for that," said Zeborah English, Public Affairs Officer. "She had never planned to attend."

Lewis, who was the honored guest this year, said after his speech that he was "absolutely sure" that Mrs. King did not intend to boycott the Israeli reception this year. "There's been a close relation for years between the government of Israel and the civil rights movement," he said. Asked his opinion of the measures taken by the Israeli army, Lewis said "somehow we must get the negotiations going and try to establish a dialogue." He added that the Reagan administration "must do much more" to promote this.

Yossi Gal, the embassy's press counselor, took a reporter aside to make his point that the demonstration outside was "an attempt to exploit this festive occasion, which marks the close relations between the Jewish and Israeli people and the black community."

But the Rev. Joseph Lowery, president of the Southern Christian Leadership Conference, who was traveling with Mrs. King yesterday, told a reporter he purposely didn't go to the Israeli reception. "I will honor the picket line," he said. "We have to register our concern about the violence inflicted on the Palestinians."

And at the reception itself some seemed concerned. "There appears to be some inconsistency," said the Rev. Clinton Austin of Emmanuel Baptist Church in Southeast Washington when asked if he thinks Israeli actions in the occupied territories conform with the legacy of King. "I'm not sure that is the method that would have been applied by Dr. King."

Nevertheless, Austin added, "it was nice of the embassy to do this. It means we do have common roots and common problems and we're still in this together. We are our brother's keeper."

Lewis' speech was simple and powerful. He recalled the "difficult days" in the movement and also "some of those beautiful moments when all of us -- blacks and whites, Protestants, Catholics and Jews ... struggled together and went to jail together." He told what it was like to grow up in rural Alabama in the 1950s, suffering the outrages of racism, and then to hear about the Montgomery bus boycott, the freedom rides, the marches. He became a participant.

"In my mind," he said, "Martin Lu ther King Jr. was a Moses, a modern-day Moses." King's work was "not only for blacks, but for human beings everywhere" as he sought "to create a world community at peace with itself."

James Zogby, executive director of the Arab American Institute, was arrested outside the embassy with three others. Before his arrest, he went to the embassy door and read a statement saying "we come today in peace to honor Dr. Martin Luther King. We come to honor the man and his message, to bring a moral challenge to the government of Israel to end the occupation of the West Bank and Gaza Strip and to cease and desist from all actions which violate the human rights of the Palestinian people." Then they sang "We Shall Overcome."

Also arrested and released on bond were Frances Adams of the D.C. Martin Luther King Jr. Holiday Commission; Josephine Butler, a D.C. political activist; and Jawad George, a Washington attorney.

Staff writer Patrice Gaines-Carter and researcher David J. Marek contributed to this report.