David Alan Etheridge, 27, a small-time drug user who in 1972 was sentenced to 120 years in prison by a Norfolk Circuit court jury bent on "making an example" of him has been pardoned by Virginia Gov. Mills E. Godwin.

In a letter to Etheridge's lawyer dated yesterday, Godwin cited the lenghty sentence as one of the reasons for granting the pardon.

Etheridge, Marine veteran of Vietnam, was convicted on Sept. 19, 1972, of selling an undercover policeman less than half an ounce of marijuana, less than one eight of an ounce of phenobarbital and 49 tablets of LSD for a total price of $105. It was the morning after then -president Richard M. NIxon went on television to annouce a stepped-up war on heroin trafficking. Etheridge got 40 years for each sale.

Judge Alfred W. Whitehurst made the three 40-year terms run concurrently instead of consecutively. But the punishment still ranked as one of the most severe imposed in Virginia, considering the crime. Without a pardon, Etheridge would not have been eligible for parole until 1982.

After the trial, one juror said he wanted "to make an example" of Etheridge to "slow down th e traffic of drugs in the area."

Etheridge had insisted on a jury trial despite the advice of his lawyer because he said he was innocent and "because I believe in the system," he later recalled.

Lewis W. Hurst, who headed Norfolk's narcotics squad in 1972, told a reporter later that Etheridge probably would have been given probation had he pleaded guilty.

Hurst, now executive director of the state crime commission, as well as the policeman who arrested Etheridge, and the lawyer who prosecuted him all have said they were not opposed to a pardon.

Etheridge spent 11 months in combat in Vietnam before coming home after being wounded with sharpnel in his head and left foot. He received several medals.

"In Vietnam, I felt like I was in a unit and we all needed to survive, and I felt that I was doing something to help the people around me. I was fulfilling a need. I guess you could say I felt like a kind of a hero," he said yesterday.

He also said he picked up a heroin habit in Vietnam "to overcome stress. It was cheaper than alcohol and easier to carry."

When he arrived home, Etheridge said, "everyone had turned against the war. I felt degraded, like I had done something wrong." He said he threw his war medals in the trash and continued to take drugs.

Doctors at Central State Hospital in Petersburg, Va., where he was sent for five months after his conviction, said Etheridge had conquered his addiction and was not mentally ill.

Etheridge did not know he had been pardoned until he was telephoned by a reporter yesterday afternoon.

"I'm so overwhelmed that it's hard to even talk. It's been hard in here. A whole lot of people and my faith in God have pulled me through this far," he declared.

Etheridge said he planned to stay up tonight until the 15 other inmates in his cell block fell asleep. "Then I'll lie in bed and try to sort out my feelings," he said. He is scheduled to leave prison Monday.

His pardon is conditional one, and requires him to see a parole officer. He said he plans to live with his father in virginia Beach, Va., work as an electrical contractor and continue studies at a community college. He had finished high school and started college in prison.