Dal Lake is best at dawn, when the boatmen glide silently toward a clearing in the bulrushes and lotus pads they call the "floating market." It's a bazaar on the water where people buy squash, pass on gossip and begin the first good arguments of the day. "Mr. Wonderful," the flower hawker, drifts by on his boat full of dahlias, offering crumpled packages of red poppy seeds that he insists will soon burst into bloom. "I'm Mr. Wonderful," he says. "I guarantee it." Out on the open water, young Kashmiri women collect lily pads almost as fast as they talk. When their boats are full, they'll take home the harvest as fodder for their cows.

For a week in Kashmir my husband and I watched the theater of Dal Lake from the splendors of our houseboat, a two-bedroom, two-bath carved cedar throwback to the days of the British raj. We were moored to shore with a view of the lake from one set of windows and of a garden of snapdragons and dahlias from the other. In the 19th century, the Kashmiri ruler would not permit the English to purchase land in Kashmir, for centuries one of the favorite summer escapes from the heat of New Delhi, so they neatly sidestepped to their palatial houseboats on the water.

Our boat was of a style that would have impressed even the most demanding British memsahib. A glass chandelier lit the dining room table, crewelwork curtains hung in the windows and plush maroon couches beckoned for naps. Fresh daisies decorated every room. From the garden came the smell of roses and honeysuckle.

Then there was Mahamdoo. "I am your personal servant," he said.

He worked out of a kitchen on shore, bringing us sweet, thin pancakes for breakfast, grilled chicken for lunch and Kashmiri meat stews for dinner. He kept the houseboat supplied with bowls of fresh mangoes, cherries and plums. He served us fresh lime sodas in the garden under the 400-year-old chinar trees. He escorted in the tailor, too, who made perfect copies of our favorite clothes in less than two days.

Kashmir is India's land of legend and enchantment, of rushing trout streams and snowcapped Himalayas, once the vital trading crossroads on the ancient Silk Route connecting Europe and China. It sits at the northernmost tip of India, geographically the size of Great Britain, strategically tucked in between Tibet to the east and Pakistan to the north and west.

Today Kashmir is a state of India, but for most of its history it was ruled by invaders who came down from central Asia. It was not until the late 16th century that Akbar, the great Mogul emperor, merged it into his empire and declared it "my private garden." When the English took over India several hundred years later, they sold Kashmir to a local maharajah for $500,000 plus an annual tribute of Pashmina shawls spun from the delicate wool found on the necks of the Himalayan mountain goats.

Kashmir remained a state run by princes until India's independence from England in 1947, when both India and Pakistan were insistent that it should become part of their new nations. Mohammed Ali Jinnah, the founder of Pakistan, wanted it because of its predominant Moslem population, but Jawaharlal Nehru, India's first prime minister and a Kashmiri Brahman who likened his ancestral land to "the face of the beloved that one sees in a dream," would not even consider giving it up.

Kashmir's reigning maharajah vacillated over which country to join until Pakistan invaded in 1947. Then he acceded to India, whose troops were sent in the next day. The fighting continued for a year. In 1965, another war erupted over Kashmir, and in the 1971 Indo-Pakistan war, there was fighting there as well. Today Kashmir officially remains a disputed territory between the two countries, but except for occasional skirmishes in the northern glaciers, things are generally quiet. Tourism is off this year, however, as it has been throughout India ever since Prime Minister Indira Gandhi's assassination.

Still, hundreds of thousands of Indians and foreigners continue to be drawn by Kashmir's special magic. The light in the morning is an other-worldly golden that turns the lake into a mirror. Prayers are heard from the Hazratbal Mosque five times a day, the low, slow chants echoing at dusk. Duckweed floats on the surface of the water, a remarkable parrot-green against the steel-blues and grays of the lake. Near the shore are "floating gardens," made of reeds and mud, where Kashmiris grow tomatoes and squash. Before the midday haze sets in, you can see the Himalayan foothills in the distance, and once during dinner we saw a perfect rainbow.

Dal Lake is a spring-fed lake about four miles long and two miles wide, sitting just northeast of Srinagar, Kashmir's capital. But much of the lake is an intricate maze of waterways where only the local boatmen can find their way. It winds into town, becoming more like a series of canals, bordered by restaurants and shops. Srinagar itself is a dusty, noisy, crowded city, full of bazaars, mosques, cows, goats and traffic.

Srinagar is an easy one-hour flight from New Delhi, and many people who live in India's capital city often flee its torrid summers for the cool breezes of Kashmir. But visitors to India in the fall and spring are lured there, too. Like much of the rest of India, it is also a land of stark contrasts. Much of its water is polluted, and there is terrible poverty.

But the charm comes through. On Dal Lake, we were soon overcome by a sense of inertia, spending our time reading in the sun or paddling out in a small boat to the middle of the lake so we could jump in for a swim. Dal Lake, for all its beauty, is not clean; waste from the houseboats is flushed right into the water and the lake's shores are clogged with lotus pads and algae. But out in the open water, the water is fresh and cold, and the weeds tickle your stomach.

There are hundreds of boats to rent in Srinagar. We stayed at Mr. Butt's Clermont Houseboats on the northern, quieter end of Dal Lake, away from the dust and noise of town. Butt is probably the best-known houseboat owner in Srinagar, with the most luxurious and expensive fleet, and an office filled with photographs of the famous people who have stayed with him. One year it was George Harrison of the Beatles with Ravi Shankar; another time it was Nelson and Happy Rockefeller. Adlai Stevenson has been there, as has former senator Charles Percy.

Neither Butt's houseboats nor any of the others on Dal Lake float freely on the open water, like they did during the raj, but at least one room in each has a view of the lake. At first they seem less like boats and more like extensions of dock, but soon you can feel the floor sway as you walk and hear the frogs splashing in the lily pads at night.

Butt has eight houseboats, some nicer than others. One of the older boats has an aging stuffed bear that stands near the dining room table. Our boat was the biggest, newest and most elegant. The electricity often failed at night, but the candles lent a coziness.

Houseboat owners in Srinagar treat their guests like members of the family, so expect them to bound in a few times a day and ask how your lunch was, and have you had your shower yet? Butt is no exception. "Is everything all right my dears?" he would inquire of us several times a day, taking personal blame for the weather when it rained, worrying that we might not be warm enough at night and fretting that we shouldn't get up too early for our Shikara boat rides in the morning.

Shikaras are narrow, graceful, gondola-style boats that serve as the principal transportation on Dal Lake. Kashmiris either stand on the stern and push with a long pole, or squat on the bow and move themselves along with a heart-shaped paddle. Either way, there is a certain grace to their movements..

For tourists like us, there was the embarrassingly large Shikara called "Queen of Sheba," advertised with its own sign and featuring curtains, springy seats, a roof to shade from the sun and Lassa, the expert boatman. For our morning rides he brought along the round, crisp Kashmiri bread with butter, and also Kashmiri tea, an aromatic mixture of cinnamon, sugar and almonds.

On the days when we managed to pry ourselves off the houseboat, we went shopping in town, often for Kashmiri rugs. At their best, they are beautiful, hand-knotted silk or wool patterned carpets, many woven in the ancient designs of animals, peacocks or gods. They are also expensive -- often in the thousands of dollars; be sure to bargain.

One day we took a Shikara ride along the Jhelum River past the "old city" of Srinagar, floating through another century of wooden mosques, rooftop gardens and hanging laundry. The houseboats here were old, ramshackle and low to the water, not for the summer vacationers but used year-round by Kashmiri families. We saw the women washing dishes by swishing them around in the water outside their kitchen windows.

Another day we went fly-casting for trout, a two-hour drive into the hills and an elaborate operation that involved two gillies, or authorized government fishermen, plus two "fish watchers," plus Mahamdoo, plus numerous kibitzers who happened to pass by. We were flailing around trying to get our fishing lines out of the overhanging branches when we turned to see an audience of 30 watching villagers absorbed by our every move.

Life in Kashmir was indeed theater, although it was not always easy to tell who was on stage. The trout was delicious.

A good side trip from the houseboat was a two-hour drive to Gulmarg, a mountain resort of lush meadows and buttercups where we rode ponies up to the snow line. Closer to Srinagar, we went water-skiing on Nagin Lake (thankfully, Dal Lake doesn't allow motorboats), using as our base an old floating raft-and-restaurant where there were faded pictures of American water-ski champions with 1960s crew cuts. The people who ran the ski boats were easygoing and pleasant, and very patient when we fell.

But the best parts of Kashmir were by far the houseboat, the dawn and the characters who live on Dal Lake. Against our better wisdom, we even bought the red poppy seeds from Mr. Wonderful, the fast-talking flower man. Who knows what will come up