In recent years, efforts to preserve and restore vintage motion pictures have rewarded movie lovers with richly enhanced, virtually complete editions of Abel Gance's "Napoleon," Akira Kurosawa's "The Seven Samurai" and George Cukor's 1954 remake of "A Star Is Born."

In addition, the advent of the home video market has provided an incentive for the occasional "instant" restoration project. If you felt disappointed at the theatrical unavailability of Michael Cimino's four-hour version of "Heaven's Gate," it was soon easy to catch up with it on videocassette. Many who doubted that Sergio Leone's four-hour version of "Once Upon a Time in America" could really have been a different experience from the lamentable 2 1/2-hour cut that bombed out theatrically were proved gratifyingly mistaken. Indeed, these reclamation projects have become so prevalent that one can sample everything from a small, savory restoration -- like the additional footage from "The Wizard of Oz" highlighted in "That's Dancing" -- to mammoth, indigestible hunks -- the uncut version of the Joseph L. Mankiewicz-Elizabeth Taylor "Cleopatra."

Inevitably, some films loom larger than others. It in no way reflects on the value of film restoration to observe that Frank Capra's 1937 production of "Lost Horizon" qualifies as one of the less prodigious titles.

On Thursday at 8:30 p.m. the American Film Institute Theater will launch a retrospective series called "Hollywood: Legend and Reality," planned to augment the Smithsonian exhibition at the Museum of American History, with what is extravagantly described as "the fully restored" version of Capra's "Lost Horizon." This revival has its nostalgic and curiosity appeal, but let us not get so carried away that the pitch is stretched around the bend.

"Lost Horizon" is a conspicuous example of a movie whose legend is more entertaining to contemplate than its content. A "fully restored" version is unavailable because Capra chucked the first two reels into the Columbia incinerator.

Capra's first lavish, prestige production, "Lost Horizon" had the potential to bring financial disaster upon Columbia and professional embarrassment upon himself and company president Harry Cohn. They were insured to some extent by the popularity and familiarity of the source material. James Hilton's wistful utopian bromide, in which a British diplomat named Robert Conway found an alternative to a strife-torn world in the remote Tibetan sanctuary called Shangri-La, had been a best seller since its appearance in 1933.

Indeed, by the time Capra caught up with the book, the term Shangri-La had long since become a national catch phrase. Among other things, it became the nickname for the presidential retreat. If it weren't for President Eisenhower, Camp David might still be known as Shangri-La.

Having brought Columbia to major status with a succession of hits crowned by "It Happened One Night" and "Mr. Deeds Goes to Town," Capra had more than justified Cohn's confidence. Nevertheless, he anticipated a production cost of $2 million, which represented half the annual Columbia budget, an exceedingly hard bullet for a chief executive to bite. (Years later the $40 million spent on "Heaven's Gate" also represented half of a company's annual production resources and forced ruin upon United Artists.) As Capra recalled the situation in his incomparable autobiography, "The Name Above the Title":

"Cohn had a bigger hunch about 'Lost Horizon' than I did -- though he never read the book. But that's the way the films got made in Hollywood: Back the hot crapshooter who had rolled four sevens in a row -- let the winnings ride on his fifth roll."

Capra's luck held, but it had to survive a major anxiety attack. The first in-house screening went well, but just to be on the safe side, a sneak preview was scheduled in Santa Barbara. As Capra described that nightmare evening, the audience "sat quietly through the first ten minutes of the film. Then -- it began to titter, where no titters were intended. I broke out into a cold sweat . . . "

He never really figured out what was wrong, but after two days of agonizing, he clutched at an inspiration -- junk the first two reels. According to Capra, this reduced the running time by 20 minutes, and it presumably leapfrogged the expository scenes, planting the audience smack in the middle of chaos as a party of frightened Occidentals hastens to escape by plane from a Chinese war zone.

The new cut was previewed in San Pedro, Calif., where the audience responded appreciatively, restoring Capra's confidence and seeming to justify his hunch about the opening reels. An amusing imponderable: Would all the anxiety have been avoided if the first preview had been held in San Pedro rather than Santa Barbara?

"Lost Horizon" did substantial business, contended for the major Academy Awards and attracted more editorial comment than movies usually do -- provoked by the combination of popularity and pacifistic yearnings. However, it was the first Capra picture to disillusion high-caliber critical supporters like Graham Greene. Greene dismissed the conception of Shangri-La as "aerated idealism" and thought it preposterous that the world-weary hero should be described as the Indispensable Man of British diplomacy, so precious that when he disappears the prime minister orders a Far Eastern conference postponed, since "we cannot meet these nations without Conway."

Box-office disaster was averted, but "Lost Horizon" fell far short of the profitability of earlier Capra hits. This circumstance was touchy enough to cause conflict between the director and Cohn, his patron.

Ironically, "Lost Horizon" was destined to lose it all for a later Columbia management. Permitted to splurge on a musical remake in 1973, Ross Hunter produced the sort of clinker that can actually unite critics and customers in derision -- in this case a pseudo-musical of astonishing inanity. Its failure cost Hunter his always absurd reputation as the golden-touch recycler of '30s tear-jerkers. It also forced an executive housecleaning at Columbia, which had needed a hit desperately and got a knockout flop instead.

Of course, some of us are movie-crazy enough to remain fond of ridiculous stuff. When Hunter's "Lost Horizon" blunders into song and dance, it's pricelessly ridiculous -- and vastly more deserving of facetious admiration than something like "The Rocky Horror Picture Show." Who knows? It might even prove more durably diverting than the Capra original, which has its own ridiculous elements -- notably the hysteric fits thrown by Isabel Jewell and John Howard and the insufferably coy courtship inflicted by Ronald Colman and Jane Wyatt.

The jettisoned opening reels account for only 20 minutes, according to Capra himself, and "Lost Horizon" ran 132 minutes when released in 1937. The restoration print being shown at AFI attempts to reassemble that version, which became difficult to restore after the movie was reissued in 1942 at a running time of 108 minutes.

Amy Turim, an assistant archivist with AFI, will augment Thursday's showing with an account of the long effort to retrieve the 132-minute version. Between searches by Columbia and movie archivists around the world, enough missing footage was located to build the running time back up to 116 and then 125 minutes; the British Film Institute turned up a complete sound track. Working from that, Bob Gitt of the UCLA film archives has attempted to bridge the remaining gaps with production stills.

This form of patching, also used by Ron Haver in his reconstruction of a "A Star Is Born," remains tolerable if the gaps are relatively brief. Unfortunately, there's one extended gap in "Lost Horizon" -- an interlude of several minutes in which Thomas Mitchell and Edward Everett Horton, the comic relief supporting players, seem to be touring Shangri-La and end up reciting a version of "Goldilocks and the Three Bears" to the village children. The only illustrative material Gitt has to cover this sequence are close-up stills of Mitchell and Horton plus a few costume poses by starlets cast as village damsels. If the scene worked, it was because the actors and kids must have been cute together. Since there's nothing illustrating that interplay, it's easy to regard the scene as expendable.

The previously restored footage can be detected at once, since the pearly sheen of Joseph Walker's cinematography gives way to harsh-grained 16 mm inserts. In many cases the cuts seem to have been motivated by the desire to save a few seconds here and there. However, there were at least two crucial interludes whose disappearance would certainly have pained filmmakers as conscientious as Capra and screen writer Robert Riskin. In the first Colman as Conway drunkenly confides his despair to brother John Howard after their flight: "Did you say we saved 90 white people? Yes, but we left 10,000 natives to be annihilated." This sentiment comes as a welcome relief after the peculiarly disconcerting callousness of the opening sequence.

This version also restores a key fragment of conversation between Colman and H.B. Warner as Chang, the major-domo of Shangri-La, discussing the community's doctrine of "moderation." The omission was rather conspicuous in the 116-minute cut, still the standard revival version, because a minute or so later the conversation continues, and Colman makes a pointedly playful reference to moderation.

Of course, one of the abiding weaknesses of "Lost Horizon" is that the pretense of communal superiority attributed to Shangri-La tends to evaporate the longer one is asked to hang around the place. It's more appealing as a vague benevolent aspiration, and the filmmakers articulate that effectively when the movie fades in and out. The prologue is vintage Capra-Riskin eloquence, at once soapy and irresistible : "In these days of wars and rumors of wars -- haven't you ever dreamed of a place where there was peace and security, where living was not a struggle but a lasting delight? . . ."

Capra himself could not ascribe to the gospel of "Lost Horizon" when his own country was drawn into wars that inspired the book's mode of wishful spiritualism in the first place. And it's a good thing for the country that Capra was temperamentally and morally incapable of sitting out a war, because his patriotic service as the American military's top cinematic educator and propagandist during World War II made him an infinitely greater Indispensable Man in reality than dear old Robert Conway will ever be in literary or Hollywood fantasy.

Gary Arnold was movie critic of The Washington Post. He appears weekly on the cable TV show "The Moviegoing Family."