STRATFORD-UPON-AVON, ENGLAND -- Terry Hands is standing stage center, walking a narrow white line, deep in thought. Members of his cast for the musical version of Stephen King's "Carrie" are watching him. This is serious role reversal. As artistic director of the Royal Shakespeare Company, Hands usually does the watching.

Hands has a lot on his mind. In this Stratford rehearsal room overlooking the Avon and the church where Shakespeare's bones lie, Hands is stitching together the RSC's most direct assault on Broadway yet. Budgeted at $7 million, "Carrie," the horror story about a lonely girl with telekinetic powers, is slated for an May 1 opening. (It opened in Stratford Thursday night.)

The director has brought together as disparate a group of international talents as one can imagine to help. The financial backing comes from a West German producer, Fritz Kurtz. The offstage creative team is strictly American Top 40. Music and lyrics are by Michael Gore and Dean Pitchford, the guys who wrote "Fame." The book is by Lawrence Cohen, who adapted Brian De Palma's film from Stephen King's novel. And choreography is by Debbie Allen.

The multinational cast is stylistically eclectic as well. The show's two name performers are Barbara Cook, legendary star of Broadway's Golden Age, and Darlene Love, legendary soul singer who reached the top of the charts at the age of 15 with "He's a Rebel." Beyond that, for the first time in Broadway musical history the cast is split fifty-fifty between British and American performers. Carrie is played by English 17-year-old Linzi Hateley. Her nemesis, Chris, is played by New Yorker Charlotte d'Amboise.

The first question about "Carrie" is, why should this musical be preparing for its Broadway opening in Stratford-upon-Avon instead of Boston, Philadelphia or Washington, D.C?

The image of the RSC to its vast North American public is one of boundless success: "Les Mis," "Nicholas Nickleby," etc. But Americans only see the cream of the RSC's work. The reality is somewhat different. The RSC's success ratio is not higher or lower than, say, Arena Stage's. But protected by distance, word of the mediocrities and the failures don't reach the United States. "Carrie" represents the first time that an RSC production has been booked into New York before it opens in Stratford. The risk is enormous but one the company was forced to take.

The RSC lives in a state of perpetual financial crisis. Its annual operating budget is $27 million. The British government provided $9.9 million and Prime MinisterThatcher is determined to provide less, not more, in the future. Last year the company lost almost $2 million.

Hands set the company on a course of self-help. "This means exploiting accidental hits like 'Les Liaisons Dangereuses,' he explains. "It also means deliberate gambling on the stock market of entertainment: Broadway and the West End."

Every year in February and March the Shakespeare Memorial Theatre in Stratford is dark as a new company of actors rehearses for the new season. Hands decided to perform a major musical at this time to generate money. Last year, the company produced a highly successful revival of "Kiss Me Kate" that is still running in the West End. This year it's "Carrie" -- which has sold out its Stratford run.

There have been criticisms of the RSC doing Broadway shows. Hands answers his critics this way: "We have a tradition of musicals. If you look at Shakespeare's late plays: "The Tempest," "Pericles," "Cymbeline" -- they are musicals," he says during a break in rehearsal. "Beyond that, there are a lot of people out here who like musicals. I want to reach those people."

But the RSC might never have come into it if Broadway's method of financing itself was a little better organized.

The idea of "Carrie" came from a night at the opera. Seven years ago Michael Gore and Larry Cohen were coming out of a performance of Alban Berg's "Lulu" at the Met. "I turned to Larry and said, 'If Berg was composing operas today he would make one out of "Carrie," ' " Gore remembers.

The pair obtained Stephen King's blessing and set to work. Gore brought in his "Fame" writing partner, Dean Pitchford, but creating a musical isn't so simple any more. "No one pays you to write for the theater," reminds Gore. So the trio had to do other things to keep the cash flow up. In 1985, Terry Hands was in New York with the RSC for a celebrated season with Derek Jacobi. He became involved in the project as an individual, not an RSC director.

The process of reshaping the material began. "Having directed Shakespeare for 23 years, his focus is truly on the text. His instinct is to pare it down to the bone," says Cohen. Lyricist Pitchford picks up the thought. "It was the classical simplicity of the story he was attracted to. When stripped of all the Americanisms of the book and the movie there is a universal human story there. Terry would find those moments and say, 'Musicalize that.' "

For example? " 'Carrie's' main number," Cohen explains. "What evolved was a book scene which became a lyric which became music and then merged invisibly, as opposed to a book scene followed by a song followed by a book scene. We became sparer and sparer in uniting those three functions."

The musical had its shape. "We thought we had done the hard work," recalls Gore. "But no, getting a show on is the hard part."

"We met a lot of people who invest in Broadway shows," says Pitchford. "Their idea of a show to invest in is a 25-year-old revival which can tour for eight months and pay off by the time its gets to Syracuse. That's the same thing as investing in tin."

Eventually producers Fran and Barry Weissler agreed to put on the show. Barbara Cook was induced to return to the musical stage after an absence of 17 years, in the role of Carrie's fanatically religious mother. Contracts were negotiated in good faith and production was announced for the fall of 1987. Then everything fell through.

But Hands had the bit between his teeth and he also had the RSC's facilities at his disposal. At an awards ceremony in New York the group ran into Fritz Kurtz, a West German entrepreneur. Kurtz, a graduate of Bethany College, had two things going for him. Having produced both "Cats" and "Starlight Express" in West Germany, he had plenty of money. He was also European, a fact which made Hands feel comfortable. "If you try to produce a hit -- you fail. If you mount work only to make money from it, you will not succeed," he explains. "A European producer is used to entering into something because he is excited by it artistically, not necessarily for financial reasons."

Broadway musicals succeed financially because of marketing strategies. Kurtz's plan is to target the college audience in the Northeast. "Stephen King is now being studied in literature classes. We want to get those students to the theater."

Artistically, "Carrie's" success depends on whether Hands can blend the disparate styles of the artists he has brought together; there is a difference between the way American performers and English performers approach a scene. "It's not a naturalistic piece," explains Barbara Cook. "Most of my work has been naturalistic. At the beginning I felt uncomfortable doing what seemed like posturing, but once I clued in to Terry's vision, I really began to enjoy the freedom to pose."

Watching Hands direct a scene it is easy to see what Cook means. He moves actors about to create pictures. The inner psychological motivations for a performer to be in a certain place at a certain time are not so important. "Naturalism has no place in music theater," he claims.

Hands pooh-poohs the notion that "Carrie" is having the furthest out-of-town tryout in history. "This is my home," he reminds a reporter. "I regard Stratford as our main engagement. Then we are going on tour. Our first stop happens to be Broadway." Perhaps, but the first performance was canceled because of technical difficulties and that's the sort of thing out-of-town tryouts exist for.

Aside from putting his company's international reputation on the line there is one more piquant pressure on Hands. For years Hands' career has existed in the shade of Trevor Nunn, his predecessor as RSC artistic director. The whispers are Hands dearly wants a New York success to get out from Nunn's shadow.

Is he nervous? "After 23 years of putting on plays my nerve ends are burnt out ..." But this is Broadway, after all.

"I think to do any play is a bit like Russian roulette. You put the gun to your head and one of those chambers one day will have a bullet and you'll blow your brains out. A play on Broadway, you've got five chambers loaded so your chances of blowing your brains out are increased fivefold. To do a musical on Broadway all the chambers are full -- you put the gun to your temple and you try to miss."

By Friday, the early returns from Stratford were in. "Enjoyable in a masochistic way," wrote Michael Coveney in the Financial Times. "Barbara Cook is superb." "{King's} fable has been thoroughly sanitized and undergone a latex injection of romance," sniffed Irving Wardle in The Times. "The show exudes all the self-pity and melodramatic fantasy of adolescent experience." The Daily Mail's Jack Tinker was particularly irate. "Here is neither the time nor the place to debate how the publicly owned Royal Shakespeare Company came to be privatised as an out-of-town tryout venue for Broadway. This musical is in enough trouble without political controversy." He had praise only for Linzi Hateley, who stars in the title role. "I hope sincerely that Broadway takes Miss Hateley to its heart."