7345 Wisconsin Ave., Bethesda. 657-3058. Open for lunch Monday through Friday, 11:30 a.m. to 2:30 p.m.; for dinner Monday through Thursday, 5 to 9:30 p.m., Friday and Saturday, 5 to 10:30 p.m., Sunday 4 to 8:30 p.m. AE, MC, V, CC. Reservations. Prices: Main courses at lunch $2.50 to $6.50, at dinner $4.50 to $9.50. Full dinner with wine, tax and tip about $10 to $15 a person. $4

The difference between an inexpensive and expensive restaurant is usually apparent as soon as you step in the door. At an inexpensive restaurant, the tables are close together (space costs money), and the decoration is minimal (carpeting and art works and craftsmanship cost money). Costs are cut close to the bone, and what you are paying for is primarily food and labor.

So the Diplomat would fool most people. It looks expensive, but you can readily eat -- with wine, tax and tip -- for $10 a person, or maybe $15 if you throw caution to the winds. True, there are cheaper restaurants. And certainly there are inexpensive restaurants with better food. But it is rare to find a restaurant that includes so much architectural flair and creature comfort for so little money.

Indirect lighting turns the dining room into a soft golden evening in Greece. The walls are rough-textured stucco, the sense of being somewhere Greek reinforced by folk crafts set in illuminated niches. Windows and skylights, paintings and murals, blown glass lamps in bright hues add variety of color and shape.

No opportunity for visual comfort is missed. Mirrors expand the room, carpet and wrap-around banquettes soften sight and sound. The dishes are attractive, pebbly white china; the elaborately shaped stemware has the texture of handblown glass. The only detraction from elegance is paper placemats on the blue tablecloths. An insignificant detration that is, reminding one only slightly that this is a "popular priced" restaurant.

The kitchen work has not been redesigned to reflect the Diplomat's new surroundings, so the food remains adequate but no exciting discovery. The menu is basically Greek, but divides into seafoods, grills, Greek standbys and a smattering of Italian main dishes. Most of them are $5 to $7, with children's specials $3.50. The eleven appetizers and four soups -- most $1 to $3 -- are even more weighted to Greece.

But back up to the wine list. It is a simple one of nonvintage shipper brands largely from France, Greece and California, nothing grand but priced very reasonably. Retsina is available by the glass ($1.50) or bottle ($8), but most of the wines are $7 or less, with a house wine at $4.50 a carafe.

Meet the atmosphere halfway by ordering a combination of cold Greek appetizers, $3.50 and large enough to share. It displays tangy grape leaves stuffed with herbed rice, the tart carp roe past known as taramasalata -- runnier than usual, but quite good -- and feta cheese, garnished with marinated canned artichokes, anchovies and black olives. All are available separately as well, along with buttery melted salty cheese -- saganaki -- or chicken livers on toast. Then there are spinach and cheese pies, the spinach pie well seasoned with sauteed onions but lacking salt and missing crispness in its filo crust. Fish soup is a good start, being a kind of mariner's vegetable soup with clams in their shells, bits of fish and shrimp.

By this point, dinner is likely to seem a success. The service can be slow getting started on a busy evening, but the waitresses are motherly and concerned, compensating for their distractions with endearing attentions.

Whether the rest of the dinner follows suit depends on what you order, and the pitfalls are plentiful.Salad comes automatically after the appetizer, reminding you that you are not on some Greek isle but in Bethesda eating iceberg lettuce with either bottled dressing or oregano and white vinegar with oil splashed over it. Illusions wither further with moussaka -- bitter eggplant with meat and a pasty bechamel on top, or shish kebab that is rare and tough one day, overcooked and dry another day. A couple of Greek dishes are wrapped in filo dough, but the chicken version was sawdust dry, disappointing despite its good homey flavor. Shrimp Santorini is a well-meaning casserole with rather sweet tomato sauce and sliced tomatoes in which are floating soft islands of feta cheese and iodiney shrimp that are cooked to toughness. Main dishes are fleshed out with rice and dried-out frozen peas. But you have better possibilities than those named above. Broiled fresh fish Greek Islands varies from day to day in its choice of fish, but it is indeed fresh and cooked just enough to retain moistness, well seasoned with oregano and lemon. It may be the best dish on the menu. Quite different sorts of dishes are the baked lamb in sherry tomato sauce -- kapama -- and lamb youvetsi and rice-shaped noodles called orzo. Both are pleasantly earthy dishes, the lamb long-stewed until it can be cut with a fork. Both are homey and likeable.

Main dishes are plentiful and desserts are unexciting, either a very sweet and slightly soggy baklava or puddings that taste rather weak, Jell-O, cheesecake or ice cream cake. You might as well finish with coffee. It is good coffee, refilled often by the waitress, and priced at a remarkable 40 cents.

And that typifies the allure of the Diplomat. Even with dry chicken and tough shish kebab, who could beat a 40-cent cup of good coffee under a skylit night in a Greek garden in the middle of Bethesda?