Under a cold, steady rain yesterday, scores of local college students waved American flags, sang "The Battle Hymn of The Republic," and urged passing motorists to honk their horns to protest the seizure of the U.S. Embassy in Iran.

"We're here to show our support for our people," said Laura Newman, a Catholic University student, who was drenched from head to foot, but held above her head a placard that read "Free the Americans."

At the peak, 200 demonstrators gathered outside the Islamic Center at 2551 Massachusetts Ave. NW, about 500 feet from the Iranian Embassy. One person was arrested when part of the group gathered across from the Iranian Embassy at 3100 Massachusetts Ave. NW.

The group began chanting "Down With Khomeini" and "Free Our People" as D.C. police officers on scooters and in riot gear moved them away from the embassy.

"Whose side are you on?" one demonstrator snapped at a police officer on a scooter as the police moved the crowd away from the embassy.

Aside from the minor incident across from the embassy, the three-hour demonstration was peaceful as Washington officials, from the White House to the mayor's office, monitored the situation. Officials have been concerned that any violence here may endanger the lives of the 65 Americans held hostage in Tehran since the embassy takeover a week ago yesterday.

Jordan Fox, the student body president at the University of Maryland and the organizer of yesterday's demonstration, said it was planned as a peaceful protest. "We are not here to promote hatred toward the Iranians," he said. "Racism, under any circumstances, is unjust. Nor are we here to cause trouble. We are sensitive to the delicate negotiations that are taking place around the clock." s

Fox said the students demonstrated yesterday "to make a pro-American statement. We are very proud of our nation and of what it symbolizes."

"We've got 60 Americans being held hostage over there and nobody's doing anything," said Shannon Matheny, an American University student. "Maybe this (the demonstration) will make more people take interest in what's going on. There wouldn't be this many people out here honking their horns today if we weren't here."

Although most of the demonstrators were college students, about 30 persons in the crowd were not attending college. They said they were present because of their interest.

"I just feel beter being here than at home," said one man, who refused to give his name, but described himself as "an average suburbinite."

Many of the demonstrators, who lined both sides of the street across from the Islamic Center, shouted "Deport Iranians," and "Down With Khomeini."

A few of the demonstrators burned an Iranian flag. Some demonstrators asked for permission to move 500 feet on the opposite side of the Iranian Embassy.

Deputy Police Chief Robert W. Klotz said he granted permission, but warned the group that they could not carry their placards down the street or chant as they passed the embassy.

About 100 demonstrators stood across from the embassy, and chanting "Down With Khomeini." One student was given a police bullhorn and he told the group that they had to move on. Many continued to stand across from the embassy and chant.

D.C. police officers on scooters were dispatched to the area and began moving the crowd away from the embassy. Thomas Mulroy, 32, of 1731 New Hampshire Ave. NW, was arrested and charged with disorderly conduct when he refused to move.

Once the crowd was moved, they began singing "The Star Spangled Banner" and recited the "Pledge of Allegiance."

Police stopped all traffic in the area for half an hour because some of the demonstrators had gone to their cars and kept riding in trucks and cars past the embassy, shouting and chanting "Down With Khomeini." The demonstratos along the sidewalk cheered them on.

After the traffic was rerouted, most of the demonstrators left. About 20 continued to stand outside the Islamic Center during the evening.