Richard Hamilton Herrud Houghton III, a Georgetown University junior, stands on the edge of Chidi's dance floor, hands shoved deep into khaki pockets. His yellow hair gleams like the polished penny loafers that tap to the beat of ''Build Me Up Buttercup.''

"Who invited the weirdos?" Houghton asks, his Windex-blue eyes fixed on the clumsy dance steps of the only couple on the floor.

"First timers," pronounces Linda Grant, 21, a senior at the University of Maryland, carefully readjusting the collar of her pink turtleneck.

"Poly-y-y-y-ester," croons Debbie Burke, 21, a junior at Mercer University in Macon, Ga.

"They won't last long," says Walter West, 25, an executive at Neiman-Marcus. "They can't shag."

For the regulars at Chidi--the neon green and hot pink, all-cotton, collegiate crowd for whom "The Preppy Handbook" is not just a best seller but a way of life--West's evaluation means everything. Shagging, a potpourri of the jitterbug, bump, bop and pretzel, is key here at Chidi. So is beach music. They go together like gin and tonic. And one of the best places to shag, to bop into old friends and blow-off the books for the weekend, according to page 177 of the Handbook, is Chidi.

Chidi (short for The Chinese Disco) is an unlikely playground for these children of affluence. The red and gold velvet walls of 2142 Pennsylvania Ave. NW are adorned with Heineken and Budweiser beer mirrors and plastic scrolls depicting Chinese rural scenes and parasoled women. Black vinyl couches and silver-specked formica-top tables surround the tiny dance floor, and behind the bar a pink shoe box serves as cash drawer. Its appearance is that of the somewhat tacky Chinese restaurant that it is by day: The Day Lily.

Chidi got its start on a cold December weekend in 1976 when Nicky Williams and Buff McDonald, now both 31, but then recent graduates of Vanderbilt University and the University of North Carolina, asked Jim Chin, the 59-year-old owner of The Day Lily, if they could rent his restaurant for a private Friday night bash. For a year and a half they had been searching for a place where they could be with their old college friends, a place to carve out their own little "Shag City," a convenient replica of the place it all began, Myrtle Beach, S.C.

Since the early 1950s, boys and belles from southern universities have spent their vacations in Myrtle, drinking brewskies and shagging on the hot sand to tunes by The Tams, The Drifters, The Embers and The Catalinas. It was the thing to do and they cranked themselves, like the music that hummed from the radios in convertible cars, to the max.

Williams says that when he found The Day Lily, he knew it was perfect. "The restaurant was dead and a little seedy."

Owner Chin went along with the plan, he says, because "I was losing my shirt at the time." It turned out to be a good move. After the first Friday night party, Chin hired Williams and McDonald as DJs, opened the party to the public and charged $2 admission. (The admission is now $3 and includes a drink.)

"The kids brought a big crowd the first night and it never stopped after that," says Chin, smoothing his thin black hair from his wrinkled brow. "They like little Chinese place."

They love little Chinese place. It's out of control, "no restrictions on behavior," Williams says. The history is intense: Like the time three Mount Vernon girls peeled off three feet of wallpaper for a souvenir. . . . Or the time freshmen pledges from a University of Virginia fraternity were sent to find Chidi and bring home evidence: One pledge brought back a waitress. . . . Or the time the guys dropped "trou" and gatored in their boxers. . . . Or the time someone kicked the reflector ball and it crashed on the floor. Everyone glittered all night.

Anyone can go for it--if, of course, they have the proper credentials. First comes attire. West owns five blue blazers--two for winter, three for all around--and a countless number of "versatile white button-downs." Fair Isle sweaters and corduroy skirts are musts for women. Robin Reardon, 24, a trainee in the buyers program at Hecht's, appears dangerously conspicuous in her faded Levis and untucked polo shirt, but, her friend Linda explains, "She works hard to get that casual look; she probably changed about six times."

But appearance isn't everything. Even the girl from Grand Rapids, Mich., knows that a southern accent is essential ("Daddy" is a three-syllable word). And even roommates who just dined together know to exclaim "Omigod!" and peck each other on the cheek when they meet an hour later behind gin and tonics. For Chidi regulars, acquiring the nuances of prep is as easy as bagging Zs on Saturday morning. As Houghton says, "We grew up prep."

"The people that come here are from good families," says Walter West. "They go to good colleges or have good jobs. You find a lot of interns from the Hill, lawyers, bankers and accountants, at C.D. There are other bars that have beach music (referred to as "the circuit:" Pendleton's, Tuesday; The Third Edition, Wednesday; E.J. O'Riley's, Thursday) but this is the best. Here the crowd is more homogeneous. It's more like a frat party."

"It's still a lot like a frat party, except now, because of the recent prep craze, you might see a Marine or someone from across the street (The 21st Amendment) just because it's cool to be prep," says Jean-Charles Dibbs III, 21, an aide to Sen. Paula Hawkins (R-Fla.). "A good percentage of the people you see here never even went to prep school."

"Girls can feel safe here because it's not a pick-up place like most of the other bars in Washington," Burke said. "The boys here are polite and most of them you know from a friend of a friend. Every so often a polyester will walk in, but he'll leave quickly. It's a closeknit group--open, yet selective."

Houghton and Reardon have been shagging their Friday nights away at "Chidi" for about two years. Houghton learned the shag when the " 'rents" parents made him attend ballroom dancing class at Eaton Prep in Connecticut; Reardon learned at "Chidi," which is a lot like learning your first crawl strokes in the Banzai Pipeline.

"It gets pretty wild on the dance floor," says Reardon, her pixie smile blossoming from the upturned collar of her monogrammed polo shirt. "People really come here to shag. When the line is long people shag right out on the sidewalk with music from a car radio."

The first notes of the '50s tune "You're More Than a Number in My Little Red Book" thump through the four-foot triaxial speakers. And Reardon springs from her seat. "Awwwright!"

Houghton swings her smoothly under his long arms on to the floor. Reardon slides out at arms length with a bass-beat kick of her Tretorn tennis shoe and coils back to him; they bump hips, bob hands, trade smiles and he whispers in her ear, "Ready?" ("because girls don't like to be dipped by surprise") and she drops, her short brown hair whisks the floor, Houghton's oxford white sleeves sweep beneath her arched back, his tie touches her nose, he pulls her up around his waist and spins her away with a soft nudge of the hip.

"They're real good," says West, watching Houghton launch another dip as the first couple retreats toward their Budweisers.

"Yeah," says Burke. "Sh-a-a-a-g city."