In the "old" Navy, when the captain of the ship was a monarch of the sea, putting a vessel on the rocks was the captain's most dreaded nightmare almost certain to sink a career on the spot.

In a case that likely would make such traditionl sea dogs as Horatio Hornblower howl from the grave, the 38-year-old skipper of the experimental hydrofoil Pegasus, damaged last summer when it ran aground in Virginia's York River, successfully has appealed the punitive letter of reprimand issued following the incident.

The Navy's about-face represents a victory for Lt. Cmdr. Charles W. Penque in his fight to regain at-sea command status and restore the spit and polish to what once seemed a highly promising military career. While Penque's supporters hail the higher command's change of heart as justified, other old salts bemoan it as further evidence of the erosion of Navy tradition.

"The tradition in our Navy and all navies is that the captain is responsible for his ship and the people on it, no matter what happens," says the legendary Admiral Arleigh (31-knot) Burke, former chief of naval operations. "There's always a reason for failure, but there's never an excuse."

"I'd like to see people who make mistakes held accountable," says Adm. Thomas H. Moorer, another former CNO. "Nowadays, if someone violates the rules, he goes up before a board of appeal, and any punishment laid on is reduced or eliminated. Some may say, 'Moorer doesn't live in this century.' That's nonsense. Experience is something you don't learn from a book."

According to Navy tradition, Penque, as commander of the hydrofoil should be held accountable for the accident - no matter what. He was on the bridge of the $65 million missile patrol boat when it became mired in mud.

Penque had assumed command only five weeks before the Aug. 20 grounding; it was his first time at sea as captain of Pegasus.

But, he maintained, there were mitigating circumstances.

For one, the navigation system failed six minutes before the grounding.For another, mistakes were perhaps inevitable with such a unique, experimental ship.

Details of the embarrassing accident have remained a mystery. The Navy invoked privacy laws in the face of press inquiries and threw a cloak of secrecy over the investigation.

Documents obtained under a Freedom of Information Act request offer a rare glimpse into the efforts of an office, seemingly doomed by the weight of Navy tradition, to salvage his career.

Following a closed administrative hearing, Penque was relieved of command and issued a punitive letter of reprimand, actions which could essentially ruin his distinguished 16-year military career.

The officer fought the Sept. 6 letter of reprimand, and two months later, on Nov. 7 the Navy granted his appeal, according to the release documents.

An appeal of his relief from command, however, is still winding its way through the Navy's chain of command.

Penque is a former enlisted man who yearned to become an officer. He won an appointment to the Naval Academy, and, following graduation, went on to serve in Vietnam, write speeches for former secretary of the Navy J. William Middendorf III and work as a weapons officer aboard a nuclear-powered guided missile cruiser. He assumed command of the Pegasus last August, an assignment that marked him as a young officer on a fast track. l

At the time of his appeal, the Navy would only confirm the Penque had appeared beofre Rear Adm. . L. Walters, a group commander in the Norfolk-based Atlantic fleet who heard the case under Article 15 of the Uniform Code of Military Justice. Officials declined to comment further, and details surrounding the incident, and the proceedings -- much like a preliminary court hearing -- remained secret.

Documents from the investigation and written statements by some members of the 21-man crew shed new light on circumstances surrounding the $750,000 in damage the ship received -- and the actions of Penque and others.

It was just before 1:30 p.m. on a hazy overcast day and the Pegasus was speeding on its foils at about 45 knots into the mouth of the York River near Norfolk. The ship was heading for Yorktown's Naval Weapons Station. Visibility was about two miles.

Penque, the neophyte skipper of three weeks who was on his first cruise aboard Pegasus, spotted several fishing boats chugging "from right to left" in front of the speeding ship. The officer of the deck steered the ship to the right to avoid them, Penque told investigators.

The skipper glanced at the charts on his lap and tried to match them with the readout on a radar monitor that showed the ship's position. The picture began to fade as the next turning point loomed ahead.

"You're losing the picture," he told the chief radar navigator, who had suddenly appeared on deck to warn the skipper that he was having trouble aligning the chart on the radar picture.

"Yes, sir," said a fretful Ronald Paul.

Penque glanced at the fathometer. It read 39 feet, he said. He thought he had plenty of water. But he was worried about the fishing boats and nets dead ahead and the navigator's troubles lining up the charts on the radar scope.

"Land the ship," he ordered. The 132-foot Pegasus came down off its foils, coasted onto its hull and became stuck in the mud in eight to 13 feet of water.

"There were four choices, " Penque told investigators. "One: remain on course -- I did not choose this because I could see on the chart this would lead directly into shallow water. Two: turn right. I did not choose this because of shoal water. Three: turn left -- did not do this because we would have to fly through a number of large fishing nets and fishing boats. Four: land the ship and stop -- the only course of action remaining."

In this appeal to Vice ADM. J. D. Jjohnson, commander of the Atlantic Naval Surface Force, Penque laid most of the blame for the grounding on "the failure of the ship's navigation system, after Pegasus was placed essentially in extremis by two fishing boats."

He also blamed the lack of a backup navigation system, "other than myself," echoing criticisms of other Navy officers familiar with such high-speed, highly maneuverable ships like the Pegasus. Such craft can either gallop across the waves at about 50 mph, on ski-like struts, or chug along at 16-knots hullborne.

While accepting "full responsibility" and conceding "errors in judgement," Penque maintained his actions "were prudent and reasonable," and detailed suggestions to improve training and operation of the Navy's controversial craft.

Penque had reported on board June 25 with "absolutely no prior experience in the operation of this unique ship, a hydrofoil," he said. After five weeks at the knee of Lt. Cmdr. William J. Erickson, who "drilled into me" that the Pegasus could turn on a dime at high speeds, "even in restricted waters," Penque took command from Erickson.

Penque defended his 45-knot speed at the time of the accident. "The higher the speed, the more maneuverable the ship," he maintained.

Nor was there any formal training for the Pegasus' hydrofoil navigators -- only "on the job training," he said. And the Pegasus was afflicted with too few qualified navigators and too little time to train others, he said.

As the commanding officer, Penque claimed that he alone was the "backup navigation system."

One command, Cruiser-Destroyer Group Eight, endorsed Penque's claim and, in a confidential memorandum, agreed that "the grounding . . . was primarilly the result of the ship's navigation system . . . Unfortunately, for six minutes prior to the grounding, the navigation system was inoperative."

"Lt. Cmdr. Penque's appeal is essentially supported" in the claims of navigation system failure and watch team qualifications," wrote the reviewing officer, who also suggested that Penque may have been going too fast in the channel. "The safe navigation record of these craft in restricted waters is checkered," he wrote. "Unsupported are his arguments as to why Pegasus operated at high speed in restricted waters for about six minutes without a functioning navigation system. . .

"He both committed a serious error in judgement and assumed an unnecessary risk" regarding the ship's safety, the reviewing officer found. Still, he conceded, Penque was "operating the ship in accordance with doctrine of long standing."

Vice Adm. Johnson concurred with the recommendation that the punitive letter of reprimand be removed from Penque's service record. Instead, he was sent a letter of caution, a nonpunitive slap on the wrist. A separate appeal is pending.

If Penque's appeal of his removal from command is granted, his career will be salvaged. Regardless, say friends, his determination is characteristic of the midshipman whose Naval Academy yearbook entry notes "will try his hardest and never give up," and the young boy who bounced back from a crippling bout with polio. Penque awaits uncertainly behind a desk in Norfolk, where he is temporarily assigned to the staff of Atlantic Fleet Service Forces.

The Pegasus returned to duty last month under the temporary command of Lt. Cmdr. Glenn F. Gottschalk. It was to be turned over this week to Lt. Cmdr. James W. Orvis, its fourth skipper in seven months.

Penque says he wants his old ship back.

"Hydrofoils are a ship of the future," he writes in his appeal."Like all innovations, mistakes are made in learning how to use them. The point is to remedy these deficiencies and not make the same mistake twice.

"I have learned a harsh lesson at the expense of my career . . . My only regret is that I may not have the opportunity to apply them."