As this city prepared yesterday to usher in a new president, confirmations and then denials of an end to the hostage crisis created a confusing swirl of emotions -- from exclamations of joy to expressions of fear that once again Iran is trifling with America.

"It's just a bad dream and now I hope it's over," said George Lynch, a retired vice president of Ford Motor Company who sat pouring over maddeningly inconclusive newspaper accounts of last-minute negotiations over the hostages.

After 443 days of rage, portents of hope and silent resignation, the possible resolution of the crisis overshadowed the inauguration of Ronald Reagan and released many from feelings that they -- as much as the Americans in Iran -- have been held in bondage. Early in the day, when officials were more optimistic than ever before, many cast aside their skepticism and seemed poised for celebration.

"It's about time. This is the best thing that's happened to the country in a long, long time," said John Ours, a Washington management consultant.

On an L Street Metrobus yesterday morning, a bus driver festooned a photograph of President Jimmy Carter with yellow ribbons. "See that," the bus driver said. "That says it all." Passengers on the crowded burst into appllause.

"It's like a holiday," Mahmoud Hassaein, an Egyptian-born flute player and butcher from Arlington.He held up a heavily bandaged hand and smiled. "Today I have an operation on my finger. But I was still very happy because the hostage release is that important."

Although the Carter administration has been responsible for the negotiations with Iran, credit for any possible breakthrough was given by many yesterday to the president-elect.

"This may be Ronald Reagan's first foreign policy victory," said Kendall Fleeharty, who works for the U.S. Chamber of Commerce and was eating lunch yesterday in Farragut Square beside a trailer selling license plates commemorating Reagan's arrival in Washington.

Jerry Falwell, fundamentalist preacher and founder of the Moral Majority, said yesterday at a Capitol Hill hotel that Reagan's "saber-rattling" was a decisive factor in the developments.

"The Iranians knew that their choice on January 22 wouldn't involve money alone," Falwell said.

The timing of the hopeful news was questioned yesterday by many of the thousands of ardent Reagan backers who have flocked to Washington for four days of champagne receptions and galas.

"I told my wife this morning that they would release the hostages on the inaugural to take the glitter off the Reagan administration," said James Howell, a cowboy-hatted Republican from Memphis, standing in the hotel atrium. "If it hadn't a been for the inaugural, they'd have kept the hostages six more months."

But for more hopeful visitors to Washington, the dovetailing of the inauguration and events in Iran seemed to fit with Reagan's campaign slogan of "a new beginning."

"It's a marvelous concatenation of events -- all these things happening at once. It's part of a whole new hope for the country," said Theodore Geiser of Newark, N.J.

Residents of Washngton did not seem as reluctant as Reagan's inaugural pilgrims to begrudge Carter some credit for arranging the complex financial agreement with Iran yesterday that seemed to spell freedom for the American hostages.

"It gives Jimmy something to go out with. It's good. Jimmy did everything he could within reason, short of armed conflict. It makes us look awfully patient, patient as hell," said Helen Bornfield, a retired secretary from the World Bank.

Some said yesterday that Carter has been far too patient, sending signals to the world that the United States could be pushed around with impunity.

"Pretty soon," said Art Moore, 50, of North Carolina, "every little country that needed money would take a few hostages."

"Carter didn't nip it in the bud," said W.C. Parker. "You gotta nip a problem like this in the bud. You can't let it mushroom. I'm rednecky myself, but I would have given them a certain number of days and sent in Cobra [helicopter] gunships."

Nell Gann, wife of Paul Gann, who was defeated by Sen. Alan Cranston last November in the California senate race, confessed her anger at Iran and the Ayatollah Khomeini. Swathed in mink, she said: "Old whiskers, that's what we call him. I'd lilke to pluck the hairs out of his face one at a time."

Yesterday's possible denouement to 14 1/2 months of pent-up anger and frustration etched Jan. 19 into the minds of many as a happy but hardly enobling day in American history.

"This is a day I will remember with misgivings," said James A. Young, the Washington-based legislative affairs manager for Nissan Motor Corporation. "There is a joy for the hostages and their families, but it is a bad day for the United States. This shows the rest of the world our weakness and ineptitude. There is a cloud of disgrace, chagrin and embarrassment. This will affect our relationship with other countries. The Russians have noted our weaknesses and will act accordingly."

Trying to follow the roller-coaster reports out of Algeria and Iran, many Washingtonians spent yesterday close to home, listening constantly to radio and televsion bulletins.

"I kept my little radio on all night next to my bed," said Bessy Blackwell, a retired domestic worker from Northwest Washington. "I drifted in and out of sleep listening to the news. I think it will be wonderful when they are all home safe and sound."