For the past two years, Carol V. Davenport's workers have sprayed a wet, slurry-like mixture into the walls and attics of hundreds of Washington-area homes in the name of energy conservation.

Called "Thermlo-K" the pinkish-gray mixture is Davenport's contribution to the booming home insulation industry and a product so much in demand that his two manufacturing plants - one in Fairfax Country and one that opened last month in Albany, N.Y. - have alreasy sold all they have produced for the coming year.

To Davenport, a 52-year-old entrepreneur who started what is now a $23-million-a-year business in an abandoned church, Thermlo-K is the insulation of the future: a "hybrid product" with insulating values far superior to anything similiar on the market. It was one reason why Washington Gas Light Co., the area's natural gas supplier, paid $6 million in August to by Davenport's operations.

But to a number of insulation and homebuilding experts, including some government energy officials. Thermlo-K is typical of an ominous trend in the virtually unregulated insulation industry: a product with inflated, dubious advertising claims.

Davenport claims to have produced a product with sharply higher insulating values than similar materials on the market. "Nonsense," says Ronald Tye, a British-born researcher who helped write a widely respected two-volume work on heat. "I'll go back to the laws of physics foe my statement," he said.

Indeed, scientists called by The Post were unanimous is saying that Davenport's controversial process of applying Thermol-K with water pumped through a Star Wars-like nozzle gun will - if anything - probably lower the product's insulating abilities.

Thermlo-K (pronounced "thermal lock") accounts foe only about 5 per cent of Davenport's current overall business, he said. But Davenport, who still runs his company under a management contract with Washington Gas, leaves no doubt the percentage would be much greater if the company could manufacture more. "We can't make it fast enough," he said recently.

Asked for documentation of this claim about Thermlo-K's insulating value, Davenport produced a one-page letter from a small St. Louis laboratory that tested the insulation last summer. Although the lab gave Thermlo-K a high insulating value, some insulation experts familiar with the tests said the lab's work appears to be mathematically incorrect.

Unsatisfied, competitors have demanded that Davenport submit the insulation to further testing by a larger, specialized laboratory that does testing for the National Cellulose Insulation Manufacturers Association, a trade group to which Davenport belongs. Davenport agreed to the tests, which will be conducted this month at a laboratory where Tye, who is critical of claims like Davenport's, works.

The feud over Thermlo-K illustrates one of the many problems in a flourishing cellulose insulation industry that, in the words of Federal Trade Commission lawyer Samuel A. Simon, "is growing like wildfire."

At least three federal agencies - the FTC, the Consumer Products Safety Commission, and the Energy Research and Development Administration - are known to be troubled by the rapid growth and what Simon says are the often "exaggerated" and unsubstantiated advertising claims some insulation manufacturers are making.

Although fiberglass accounts for the bulk of the home insulation currently sold in the country, insulation firms claim it is in short supply in the Washington area and elsewhere. Faced with mounting consumer demand, many Washington area insulation installers have turned to the most readily available product: cellulose insulation.

Cellulose insulation, which Davenport has manufactured for three years at a small Lorton plant near Rte. I-95, is made from finely ground newspapers that are treated with chemicals, principally boric acid. The chemicals are supposed to overcome a serious potential problem with cellulose by making the resulting pulp flame resistant.

Properly manufactured and installed, cellulose insulation can be an excellent insulator, most insulation experts agree. But because of the low cost of manufacturing cellulose and reported shortages of boric acid, the industry has attracted a number of "shoddy, blue-suede-shoe manufacturers," a spokesman for one insulation trade group conceded in testimony before the Consumer Products Safety Commission in August.

Davenport himself has said that the cellulose insulation industry has been plagued by wild claims and fly-by-night operators, and needs policing by the government.

In his advertising and in person, he boasts of his quality control measures - hourly checks on production at his Lorton plant, for instance - and the detailed training about insulation and its installation that he insists that his workers and any other company that buys his products receive. The result has helped make Davenport the largest home insulation firm in the Washington area, and has enabled him to expand his operations across Virginia and into North Carolina, Maryland and New York.

But success has not been able to insulate Davenport from the very issues that he says trouble the industry. "It seems like the larger you are, the more people take pot shots at you," he said with a sigh recently at his Springfield office.

"We say that's just sour grapes," he said, when asked about the furor in the insulation industry over Thermlo-K. "As the years go by, I am positive that this (superiority) will be identified by everybody in the industry."

Davenport says his crews are placing Thermlo-K in about 12 homes every day and demand for the product is so great "we can't make enough of it."

Advertising claims he has made for the product are equally dramatic. Heating and cooling bills can be cut "as much as 60 per cent" with the product according to advertising his firm has placed in The Post.

Officials of at least one federal regulatory agency are known to have been troubled by the claim, which, when asked, Davenport qualifies, Such a savings, he said, can come by comparing a "completely" insulated home to one with "no insulation" at all. His ads do not contain the qualification, and one ad with the claim spoke only of the dangers of a home with "poor insulation."

Within the insulation industry, however, greater controversy has come from Davenport's claim that Thermlo-K has an insulation value, described by scientists as an "R value," of 5.2 per inch of material. If correct, his claim would make Thermlo-K the most effective of any cellulose insulation on the market, scientists said.

"I personally don't have any doubts that this product will meet an 'R-5' when it is blown under certain conditions," Davenport said.

But Tye, a senior scientist at Dynatech Laboratories in Cambridge, Mass., the lab that soon will test the product, strongly disputed the claim. "Anyone who quotes an 'R' of '5' or more does not know what the mechanisms of insulation are," Tye said. "In any insulation there are physical restraints on what 'R' values are."

Still air, said to be an excellent insulator, for instance, has an 'R' value of 5.5 - the upper limit for virtually any product that contains air. Cellulose insulation depends largely on air trapped inside the billows of fibrous material for its thermal values, and most cellulose insulation has an 'R' of between 3.6 and 3.9 per inch, according to Stewart Sterling, a Dynatech Lab manager. "Basically, it's all the same," he said.

Davenport's claim that he improves Thermlo-K's 'R' value by adding water also troubles many scientists. That "seems to be the reverse" of what testing at the Ontario Research Foundation in Canada has discovered in testing insulation there, according to Cyril S. Gibbons, a senior researcher at the industry-funded laboratory.

Davenport disputes those statements, saying that critics fail to consider the fineness of the newspaper, chemicals or the chemicals themselves that he uses in making Thermlo-K. "If you grind that chemical to the fineness of face powder, then it changes the whole complexion of what you have," he said.

Scientists interviewed by The Post said they had been able to ascertain little change in 'R' values that they could attribute to various grinds of materials used in making Thermlo-K. By adding water and adhesives to the cellulose, Davenport probably compresses the cellulose, reducing its 'R' value below the level of conventional, loose-fill cellulose, they said. "The more dense a product is, the less effective it is," Gibbons said.

Ray Tichenor, owner of People's Insulation, Inc., one of Davenport's Fairfax County competitors, is among those who dispute Thermlo-K's alleged superiority over conventional cellulose. "If you can tell the difference between it and dry cellulose, I'll eat it," he said.

The Dynatech tests won't be conclude until later this month, and although Davenport says he is confident of the outcome, he hesitates over how much of the test data he will release. "I have no intention of giving away proprietary information," he said. "That would be ridiculous."

The dispute over Thermlo-K is seen by many as a barometer of how rapidly the insulation industry has changed in recent years. "Two or three years ago, nobody would have cared," said Art Johnson, director of energy for the NAHB Research Foundation in Rockville, a group affiliated with the National Association of Home Builders. "That's how important a business this has become. Today it's important not to skate on thin ice."