They're dancing a cutting-edge, off-the-wall, somewhat avant-garde sort of jig at Woolly Mammoth Theatre Company this week. With the reported acceptance of a proposal by the developer JPI to create a spanking-new space on Seventh Street NW between D and E streets--a space that includes a 250-seat theater--it appears that the company is going to have a new home.

At a news conference scheduled for today, the General Services Administration is expected to announce that the Texas-based apartment developer with an office in Vienna has won the competition to build on Square 457. Woolly has an agreement with JPI and thus would be expected to be the "arts component" of the firm's project.

"We're all tremendously excited," the theater's managing director, Kevin Moore, said yesterday.

It could be years before the project is built. Woolly, meanwhile, has been operating of late on a month-to-month lease at its Church Street NW space. According to Moore, the theater has had no indication from its landlord, the Unification Church, that it will have to leave any time soon. Moore also said the theater will mount a campaign to raise well over $1 million to finance Woolly's share of the costs of outfitting the theater and to begin a fund to help pay the rent at the new space.

Artistic director Howard Shalwitz is in Buffalo directing a play, but Moore spoke for him about Woolly Mammoth's artistic mission: "We'll continue to do bold and edgy and risky and unusual plays." But it appears its days are numbered at the odd, V-shaped auditorium with the pesky pillars and that low ceiling. A new state-of-the-art space "creates more possibility for us artistically," Moore said.

At the Shakespeare Theatre, situated across the street from the Seventh Street site, managing director Sam Sweet expressed mixed feelings: "I like Woolly Mammoth. I love their work, and I'm glad they're going to be downtown, but you need something more than the Shakespeare Theatre as we are now, bursting at the seams, and Woolly Mammoth across the street to make a theater district. Downtown needs to become a destination."

Sweet faults the city of Washington for failing to offer enough financial incentives to encourage the development of arts facilities on a much larger scale. "I think there was an opportunity to do a lot more," he said. "When you look at Los Angeles, Chicago, Philadelphia, even what's going on in Arlington and Montgomery counties, there are strong incentives in place to support cultural facilities. . . . And it would be nice if the city and federal government could learn what other municipalities have learned."

The Washington Stage Guild, which recently lost its space near Ninth and G streets NW, was affiliated with one of the other Seventh Street proposals, now rejected by the GSA. Still, it's not quite homeless. It's been invited by Source Theatre Company to share its space on 14th Street NW this season and is finding the arrangement pretty comfy. So comfy that Stage Guild artistic director John MacDonald mused yesterday about the possibility of making the arrangement permanent.

"We're all getting along like gangbusters right now," he said, "and if it works out something will probably develop out of it."

'Cradle' of Controversy"This was a play that people in the Congress of the United States believed might bring down the government," said director Jack Marshall with awe and just a trace of glee. He and his American Century Theater will revive "The Cradle Will Rock," Marc Blitzstein's musical social satire, Thursday through Nov. 20 at the Gunston Arts Center in Arlington.

Originally funded during the Depression by the Federal Theater Project, the play was directed by Orson Welles and produced by John Houseman. But Blitzstein's leftie politics apparently petrified the New Dealers, who closed down the production on its opening night in June 1937 and locked the Manhattan theater. Then, the story goes, Welles and the cast led the 1,700 members of the audience 20 blocks to an empty theater, where they presented the play like a bit of guerrilla theater. It created a "sensation," played for two weeks, then closed. The FTP later relented and "The Cradle Will Rock" ran for 108 more performances in 1938.

"It's a very revolutionary piece, but it's done in such a satiric way that it's hard to understand how anybody could have been scared by it," Marshall said on the phone last week. In Blitzstein's allegory, a prostitute waiting to be arraigned in court encounters a group of upright citizens in Steeltown, USA, and learns through flashbacks how they've been corrupted.

"When you look at it today . . . it seems so broadly drawn," Marshall said. "He [Blitzstein] takes on in successive scenes the church, the artistic establishment, the press, the medical establishment and shows how they have been systematically corrupted by the powers that be in the United States to support an unholy cabal to keep down the common man."

The play has been revived several times since, and a Tim Robbins movie based on the story of its premiere is set to open in December. But Marshall wants to re-create the feel of that opening night--live.

He's decided to have the audience thrown out of the theater with the actors, who'll then break into a rear entrance and lead the audience back in to present the play on the sly. Marshall plans to use different scenarios at the start of each show, with which the actors will have to improvise.

Theatergoers may notice a film crew at some performances. There's a documentary in the works about the FTP, and its producers thought a revival of "The Cradle Will Rock" might prove useful. American Century Theatre will also present, on "Cradle's" off nights, a 1998 play by Jason Sherman about the 1937 fracas, titled "It's All True."

Follow Spots

* Two budding playwrights were honored at a Kennedy Center ceremony last night. The 1999 Playwright Discovery Evening, presented by VSA (formerly Very Special Arts), featured performances of "Under Achievement" by Danielle Mullen of New Mexico and "The Dirt Makers" by Edward P. Mannix of Massachusetts, both one-acts about living with disabilities. Mullen received the 1999 Playwright Discovery Award for writers 21 and younger, Mannix the award for those 21 and older. Their entries were chosen from a national field.

* The Theatre Conspiracy will present a new satiric play by Barbara B. Goldman about growing up female. "Perfect Women" is about a 13-year-old girl's obsession with her Barbie. It will run at DCAC Thursday through Nov. 21. Call 202-462-7833.

* Phoenix Theatre, now ensconced at the 1409 Playbill Cafe on 14th Street NW, will open "The Gershwin Vampire" on Thursday, running through Dec. 5. Presented "with slides and song," it's about relationships and, presumably, bloodsuckers. Call 202-745-0643.

* SCENA Theatre will perform a workshop production of Kafka's "The Trial" at the Czech Embassy tonight at 7:30. Call 202-274-9100, Ext. 3413.

CAPTION: Woolly Mammoth artistic director Howard Shalwitz.