The woman was well dressed and obviously affluent, but she looked like a beggar -- the kind of highly specialized beggar that haunts this beautiful old city during its annual summer festival.

She sat outside the Festspielhaus (Festival House), scene of some of the world's most lavish operatic productions, watching the taxis go by -- taxis with advertisements of Andre' Previn, Jose' Carreras and Jessye Norman painted on their doors -- waiting for a scalper to come by, begging for the chance to spend $200 or more on a second-hand ticket.

"Suche Macbeth" (Looking for Macbeth) read the neatly hand-lettered sign that protruded discreetly from her purse. She was hoping for a ticket to the controversial production that provoked a fist fight between stage director Piero Faggioni and festival director Otto Sertl over whether Shakespeare's (and Verdi's) witches should perform topless. But controversy and publicity are not needed to sell tickets to Salzburg.

Ticket hunting is one of the city's most active industries each year, from the last week of July to the last week of August. Every day, latecomers visit one of the world's quietest box offices and are politely told that the seats they are looking for were sold months ago. You may be able to get a last-minute ticket for an evening of lieder or chamber music here, but not for opera. And the "suche" signs blossom like flowers outside the Festspielhaus when the star of the evening is Herbert von Karajan, who is not controversial but should be.

A few blocks away from the feverish activity at the Festspielhaus, the scene is very different. A casual visitor might guess that this ancient city has a special musical interest, judging from the uncommonly large number of music shops and the advertising for records that can be seen on video screens in all kinds of store windows. But most of the tourists who flock here in the summer seem to be attracted by other charms: mountains, museums, good beer, distinctive cuisine and, above all, the superb scenery.

For more than 1,000 years, Salzburg was ruled by dignitaries of the Catholic Church, the last being Prince-Archbishop Hieronymus von Colloredo, who had Mozart literally kicked out of his court and was, in turn, later (not literally) kicked out by Napoleon. During this millennium, the chief occupation of the city (besides the salt mines that give it its name and are still producing) seems to have been the construction of magnificent architecture.

The city straddles the Salzach River and snuggles among three mountains, the tallest of which is dominated by one of the best-preserved medieval fortresses in Europe. It has a remarkable number of churches for a small city -- more than 40, some of which are among the continent's finest examples of Baroque architecture. Their bells keep the Salzburg air vibrating on a Sunday morning, and their carefully developed visual appeal attracts throngs of visitors. More frivolous tourists are attracted by the remarkable pleasure palaces, Mirabell and Hellbrunn, which housed the mistresses of notable Renaissance archbishops. Finally, there is a casino, dominating a mountain like the medieval fortress and bringing in considerably more money.

Chances are that nearly everyone who comes to Salzburg has heard of its most famous native, Wolfgang Amadeus Mozart. The city honors his memory with two squares (one on each side of the river) called Mozartplatz, and its ingenious citizens have attached his name to various products that augment the caloric intake of tourists: a Mozart liqueur, flat chocolate Mozart "thalers" (or dollars) and above all the round chocolate and marzipan Mozart-Kugeln ("Mozart balls"), which are manufactured at a rate of 150,000 per day.

But it is possible to spend an enjoyable week or two in Mozart's birthplace without hearing a note of his music or visiting any of the shrines dedicated to his name. These include the houses (now museums) where he was born and lived, and above all the Mozarteum, a 100-year-old foundation and center of musical studies that is already preparing for the 200th anniversary of his death in 1991.

Mozart's face is everywhere, in shop windows, on candy wrappers and even on the streets and sidewalks. Salzburg has an art school that draws students from some 30 countries, and as a result its street artists are numerous and excellent. A fine portrait of Mozart can often be seen chalked on one of the narrow streets of the old city where there is only pedestrian traffic. It will be showered with tourists' coins when it is fresh and the artist is still present, scuffed by pedestrian footprints the next day, and finally washed away by rain to make room for a new portrait.

The music is harder to find than the pictures, mostly because the festival's three major halls will hold only 1,300 to 2,200 patrons at a time, a small fraction of the tourists who pour into Salzburg. Figures are not yet available for this year's festival, which ends today, but last year the festival sold 178,000 tickets at prices ranging up to 2,800 schillings -- between $130 and $150, depending on the exchange rate. It is the most expensive opera ticket in the world and the festival routinely sells out.

The tickets are usually if not always worth the cost and effort. If money can assure quality (and frequently it can), the quality of music at Salzburg is richly assured. Its operatic productions set world standards not only in the cost of the tickets but in the technical quality of the product. Three of them seen in a recent, typical week ("Carmen," "Cosi fan tutte" and "Il ritorno d'Ulisse") had a richness of scenery, costumes, lighting and special effects that made the Metropolitan Opera seem not quite provincial but parsimonious. In two of them, the singing and stage direction matched the quality of the staging technology. The third was "Carmen," conducted and directed by Salzburg's second most famous native, Herbert von Karajan.

Except for soprano Janet Perry, the cast of this "Carmen" was identical with that in von Karajan's recent recording of the opera: Agnes Baltsa, Jose' Carreras and Jose' van Dam; the orchestra was the Vienna Philharmonic, certainly the finest opera orchestra and arguably the finest orchestra of any kind in the world. The sets, by Gu nther Schneider-Siemssen, were both realistic and evocative. All the ingredients for a breathtaking performance seemed to be present, but the result was predominantly dull and the reason was not hard to see: one element -- Herbert von Karajan -- overwhelmed and ultimately stifled the others.

The orchestra sounded superb throughout, but the singers seemed intimidated by the conductor, a phenomenon common in von Karajan's performances of recent years. The effect was most noticeable in Baltsa, a singer internationally noted for the fiery energy and sexual magnetism of her Carmen. In Salzburg, there was an impression that her performance was deliberately toned down. During her two big numbers in Act 1, she moved like a puppet when she moved at all; the voice was good (except for a bit of roughness at the end of the "Habanera"), but it was subdued, merging into the orchestral sound rather than soaring above or cutting through it.

Von Karajan probably cannot be blamed for the vocal problems suffered by Carreras on that evening, unless they were psychosomatic, but he was responsible for the stage direction. It was at least a generation out of date, with street urchins marching across the stage in perfect formation like a crack army platoon -- or like the sound of an orchestra under Von Karajan's baton. And it was clearly his idea that the crowded stage should freeze into immobility whenever the orchestra had something interesting to do. The Age of the Prima Donna is not over -- he stands at the podium. Or, rather, he leans on the podium; von Karajan's physical strength is fading, though his will remains as strong as ever.

Von Karajan also conducted an all-Tchaikovsky concert, with Anne-Sophie Mutter as soloist in the Violin Concerto. Mutter's phrasing squeezed out every ounce of emotion in the music, and her technique was impressive. If music lovers were polled on what they would most like to hear von Karajan conducting, Tchaikovsky's name would probably be rather far down on the list. But the "suche" signs were brandished outside the Festspielhaus like placards at a political demonstration. When he is performing, von Karajan seems to embody the Salzburg Festival.

Fortunately, most of the music at Salzburg is made by performers who are not yet musical monuments. East German conductor Christof Prick is one, and he conducted a delightful "Serenade" evening that included the world premiere of the Triangle Concerto by his compatriot Siegfried Matthus. The tiny, tinny percussion instrument was featured prominently in several parts of the playful seven-movement work, which ended with the whole orchestra and the conductor playing on triangles. But the music was also notable for its instrumental colors and fine melodic touch.

The rest of the program was Mozart, highlighted by "Eine kleine Nachtmusik" and the amazing Divertimento in D, composed when he was 16 years old. It was good to hear this whimsical work well performed almost on the spot where it was composed. The orchestra, in no way comparable to the Vienna Philharmonic, was nonetheless a good one, clearly attuned to the Mozart idiom.

Among the festival's solo programs was a boldly chosen and superbly played recital by pianist Bruno Leonardo Gelbert, who does not play often enough in Washington. It opened, daringly, with Beethoven's "Eroica" Variations -- not exactly a warmup piece -- and continued with three well-contrasted works by Liszt and Schumann's Symphonic Etudes, Op. 13. The playing was technically brilliant, emotionally compelling and imbued with a clear sense of the highly varied forms.

But opera remains the primary interest at Salzburg, and two productions were of outstanding interest. "Cosi fan tutte," conducted by Riccardo Muti and almost perfectly cast, received a performance in which theatrical and musical values were ideally balanced and shed light constantly on one another. If Von Karajan's "Carmen" represented, in some ways, a victory of the conductor over everything else, Muti's "Cosi" represented a triumph of ensemble work as an ideal in performance. This was true not only in the singing and orchestral playing but in the integration of the music with the staging and the unusually effective lighting.

"Il ritorno d'Ulisse," conducted by Jeffrey Tate, showed off two qualities for which the Salzburg Festival is noted: tradition and innovation. Monteverdi's orchestral parts for this opera have been lost; all that is available are the vocal parts and an instrumental bass line. For its new production, the Salzburg Festival commissioned Hans Werne to produce a "new, free arrangement," which blended some strikingly modern sounds into the familiar material. Combined with high-tech stage effects, the music developed a tension between the old story and its modern presentation that sometimes gave the opera a vivid new life.

Both productions rejuvenate old material, but in different ways; the Salzburg "Cosi" works within an established tradition, deepening and refining the impact of a work that has been sadly misunderstood through most of its history and is still imperfectly appreciated. All of the singers were first-class, with Kathleen Battle bringing a special vitality to the role of Despina and Sesto Bruscantini showing the polished ease of a veteran performer in the role of Don Alfonso.

But the chief glory of the production (besides Muti's conducting) lay in the solo and ensemble singing -- particularly the ensembles -- of Margaret Marshall, Ann Murray, James Morris and Francisco Araiza. Almost equally important, though subtler in impact, were the stage direction of Michael Hampe and the sets of Mauro Pagano, which subliminally underlined the male-female polarity that is the opera's true subject. Properly viewed, this production is almost a feminist answer to the indictment of women in the opera's title ("Women are all like that"). Macho swaggering and manipulativeness are spotlighted in the opera's theatrical treatment and, remarkably, once presented to the eyes, they can be heard more clearly in Mozart's music and Lorenzo da Ponte's libretto.

"Ulisse," also brilliantly staged by Hampe and Pagano, has no such integrated impact but impresses rather with a series of spectacular visual and musical effects. The opera has its longueurs, but in this production they are redeemed by episodes of intense action, occasional touches of calculated quaintness and music of often stunning impact. In the large cast, outstanding performances were given by Thomas Allen and Kathleen Kuhlmann in the title roles.

These productions at Salzburg are presented for an audience that seems to pride itself on its taste and elegance. "Visitors are expected to dress in keeping with the festive character of the occasion," advises a notice on the back of the tickets, but for most members of the audience no urging is needed. Formal dress is almost mandatory at the opera and is fairly common even at 11 a.m. concerts -- though some members always proclaim their dedication to music alone by refusing even to wear a necktie.

The hour before an opera curtain here is something like an opening on Broadway or Oscar night in Hollywood. Those who cannot get tickets line up by the hundreds across the street from the Festspielhaus to watch the elegantly clad patrons (including a fair sprinkling of celebrities). Even more than those with "suche" cards (who at least hope for upward mobility), these spectators are the proletarians in the class system of opera at Salzburg -- the have-nots watching the haves. In most cases, there are few overt signs of envy, though citizens often complain about the subsidies for opera and the complaints are loudest among music lovers. Why, they ask, should their taxes support operas that they cannot see?

But opera is deeply rooted in Salzburg. This city was the first in the German-speaking world to have a staged operatic performance -- in 1617, when the art was still in its teens, under the auspices of one of the lively archbishops of that era. It was upper-class entertainment then, as it is today, though anyone in Austria has some access to opera on radio and television. There is periodic grumbling in the regional and national legislatures about the heavy subsidies. At the beginning of this year's festival season, Herbert Moritz, Austria's minister of education, culture and sports, issued a grumble about the subsidies that has become an annual event in Austrian politics.

His threat to eliminate the subsidies was answered, directly or indirectly, in the following weeks with blizzards of figures attempting to show the economic importance of the festival in Salzburg's and Austria's economies. One figure in circulation has the festival itself producing 85 million schillings (more than $4 million) in taxes, compared with the 68 million schillings ($3 million) in subsidies. According to another statistic, the money spent by the festival-drawn tourists outside the festival brings in 272 million schillings (more than $13 million) in taxes. These figures are significant in a country with a population of 7.5 million. And they are not hard to believe in a country where more than a quarter of the total economy is based on tourist trade and sales taxes range up to over 30 percent on some luxury items.

The subsidy for the festival, national, regional and local, has been gradually reduced in recent years but remains substantial. Whether it repays itself is a subject for constant and often heated parliamentary debate. But the immediate future of opera in Salzburg seems secure, if only because the stars and the patrons, outside the opera houses, seem to amuse the citizens more than the unseen operas would.