"The karma between her and I is amazing," says director Garry Marshall. "It's spooky. I mean, like, wooohooo!" he adds, waving his hands to suggest elements of the supernatural. He is speaking of Julie Andrews, star of "The Princess Diaries." As evidence of the wooohooo, Marshall offers: "Princess" was shot on the same Disney lot -- the same stage, in fact -- where Andrews made "Mary Poppins" in the early 1960s. During that filming, she lived in a Disney-owned house in Toluca Lake. It happens to be the very same house Marshall has occupied since 1974. "She came over for tea when we found out," he recalls. "My wife was so nervous. She said, 'Tea! For Julie Andrews!' "

Certainly, the director and actress share a symbolic connection: From her stage appearances in "Cinderella" and "My Fair Lady" in the 1950s, to his "Pretty Woman" and "Runaway Bride," 1990s updates of damsel-in-distress tales, both Andrews and Marshall have proved themselves masters of the modern fairy tale.

In their latest incarnation of happily ever after, based on the first of two "Princess" novels by Meg Cabot, Andrews plays Queen Clarisse Renaldi, of the fictional European principality of Genovia. ("A lot of people wear tiaras," notes Marshall. "Julie Andrews wears a tiara.") Half a world away is Amelia "Mia" Thermopolis (Anne Hathaway), a gangly 16-year-old who shares a very non-royal San Francisco lifestyle with her free-spirited artist mother. One day the queen descends on this pair and announces the truth that Mia's mom has been concealing: Mia is, in fact, Princess Amelia, heiress apparent to the throne of Genovia. Now, because of the death of Mia's father, Queen Clarisse must, in true Henry Higgins fashion, remake the gawky girl into a vision of regal grace, fit to take the throne.

And what a transformation. One Los Angeles moviegoer actually gasped in shock at the unveiling of the suddenly glamorous adolescent.

"This is an empowerment story," says producer Debra Martin Chase, vice president of Whitney Houston's BrownHouse Productions. "The message is, 'You have the power to be anything that you want to be.' In the beginning, Mia looks in the mirror and doesn't think she's princess material at all. She comes to believe that she is. And the rest is just window dressing."

"Yeah, she gets the makeover," says Hathaway, "and that's fun and great. But she also realizes that life shouldn't be about what the rest of the world can do for her. [It should be about] doing everything in her power to help other people." The emphasis, says the actress, who is majoring in English and women's studies at an East Coast college, "is on the emotional transformation, not the physical one."

Asked about the film's hint of girl power, Chase says: "I hope it does come across that Mia and her friend Lilly [Heather Matarazzo] are very politically conscious young women. In the book Mia is very, very environmentally conscious. [But] we kind of took a step back. We didn't want this to be a political diatribe."

In fact, BrownHouse (which also made "The Preacher's Wife," starring Houston and Denzel Washington) has made a point of challenging traditional notions of race and gender not through didacticism or dogma, but simply by changing them -- presenting dignified people of color and powerful women as the norm.

In the late 1990s the company made "Rodgers & Hammerstein's Cinderella" for ABC. The film, which was shown on ABC and the Disney Channel but failed to win a theatrical release as Houston had hoped, received widespread critical praise for its multicultural casting. In this version of the fairy tale, Houston was the fairy godmother and African American pop singer Brandy Norwood was the rags-to-riches princess. Paolo Montalban, a native of the Philippines, was cast as the prince, while Whoopi Goldberg and Victor Garber (African American and Anglo American) were his fully credible royal parents.

BrownHouse, according to Chase, feels "very strongly about this niche and what I call 'female wish-fulfillment' stories." In fact "Princess Diaries" is but the first of a series of similar stories that she and Houston hope to bring to the screen. Two projects in the works, for example, are about all-female singing groups chasing their dreams. "Sparkle" is a remake of the 1976 movie about African American vocalists climbing to the top of the charts in the 1960s, and "Cheetah Girls" features a multicultural band of teens in present-day Manhattan. BrownHouse is also set to revive "Sleeping Beauty" for ABC, but this time "with a more Latin flavor," says Chase.

So why does "Princess Diaries" have an all-white cast?

Two reasons, says Chase. "One, we decided to be true to the book. Mia is a European princess. Her grandmother is queen of a European country. Two, as a producer who is female and African American, I want to make good movies. I don't always necessarily want to make African American movies. It's a rare situation where you get this chance."

"Rare" is an understatement. Although the Producers Guild of America doesn't track ethnicity or gender, according to reference librarian Greg Walsh, an informal survey of industry insiders (including Walsh and his colleagues) yielded only one other black woman, apart from celebrities, who has ever executive-produced a major theatrical release that wasn't targeted at African Americans: Tracey Edmonds, whose "Josie and the Pussycats" came out this year.

BrownHouse was also largely responsible for compiling the "Princess" soundtrack, which, interestingly, displays more girl power and ethnic flavor than the film does. "I can be anything I wanna be," boasts Lil' J in "Ain't Nothing but a She Thing" -- a message that is hinted at but never stated in the film's dialogue. Krystal Harris, 19-year-old protege of the Backstreet Boys and the first artist to appear on the band's new Street Records label, contributes the funkiest track, "Supergirl."

And so the fairy tale endures with only the most minor adjustments. Like "Shrek," this summer's blockbuster hit, "Princess" is willing to tweak the formula a bit but never to dismantle it. Ugly goes with ugly, these films remind us. And beauty definitely goes with tiara.

"The fairy tale is alive and well," agrees Marshall. "But you have to do it a little edgier these days. The kids are turned off if it's total fairy tale." He notes that in a play he produced at the Falcon Theatre in Los Angeles, "Beanstalk! A Tall Tale for Kids and Their Families," "Jack is Caucasian and Jill is Afro-American. Nobody says anything. Not one kid in the audience says, 'Why is that?' "

At least Princess Amelia gets to bypass the old precondition of marriage for her wealth and power (she gets that through patriarchal lineage), but the perks are the same in the end. And she lands her guy, of course -- a sweet loner type. He "cleans up real nice," as a character from "Pretty Woman" once put it.

And just in time for a dance at the royal ball.

"This is an empowerment story," says producer Debra Martin Chase of the soon-to-open "Princess Diaries."Anne Hathaway, center, goes from pauperish to princess under the guidance of Larry Miller and Julie Andrews in "The Princess Diaries."Garry Marshall: "The fairy tale is alive and well.""I want to make good movies. I don't always necessarily want to make African American movies," says producer Debra Martin Chase.