In the library of Arlington's Gunston Arts Center, a tiny audience watches a tiny stage. The props are few, the plot line is nearly imperceptible and the actors must read their lines.

The idea behind all this smallness and simplicity is large: It is a belief that certain books or poems deserve to be read, that some ideas are worth presenting without the distractions of elaborate plots and costumes, that theater is not all lights and splash and glitter but clear communication from one soul to another.

This is Wordstage, a reading theater now in its second season, thanks to support from Arlington's Visual and Performing Arts Department and the Virginia Commission for the Arts.

This weekend, as last, Wordstage is presenting readings on the "American Dream" from works by Studs Terkel and others. Last December, troupe members presented choice bits from the ancient Greek Aristophanes; later in the season they will do medleys on aging and the American tradition of protest. All materials are selected and arranged by the directors, so the presentations are fresh and personal in the best tradition of intimate theater.

Once the material is picked, the director has three weeks to choose the cast, gather props, design the lighting, arrange the sets, conduct rehearsals and present the work to the public.

"We wanted a place where actors and directors could come and work without putting in a big time commitment," said Robin Lyttle, director of the present show and one of Wordstage's founders. "And we wanted a theater that could do some experimental stuff--not just Neil Simon plays."

What she has created for the current production is a gathering of versatile actors who, with occasional reference to scripts, walk through the common man's version of the American dream. A baseball club owner talks about what it's like to have a losing team in an America that loves winners; a former Miss USA, who claims her title was misbestowed ("It was like Tom Sawyer becomes an altar boy"), chafes under the necessity of "living the American dream for the public, not for me."

The tales are touching. Manney Rosenzsweig, whose mother and nine siblings came from Poland, tells of his arrival in Chicago and his attempts to eat one of the bananas his father brought as a welcoming gift. ("I didn't know you have to peel it. My mother thought it was sausage, but my father told her it was kosher.")

The stories also are poignant. A mother and daughter, who left with their family for Australia and returned, changed, observe, "We're home in America, but we're not back home again."

Lyttle intersperses these musings with comic skits showing American extremes. In one of them, two old school chums, one materially successful and obnoxious, the other a hopeless derelict, "choked by the old questions," each argue over how rotten their respective childhoods were. In another, the empty rich of the San Fernando Valley go under in the ultimate earthquake and discover that "it's too late to improve the quality of life" (great laugh).

The skits don't work as well as the individual tales, perhaps because they are obviously contrived, in contrast to the material in the readings, which comes from the hearts of real people overcoming real obstacles.

Not all the readings work, either, however. In the opening number, Lyttle juxtaposes three businessmen for reasons that continue to be obscure, discussing the different ways in which their businesses and lives intertwine.

Perhaps the most effective parts come at the ends of both acts, when the whole cast stands and, one by one, barks out variations on the dream. "The American dream is a happy ending," says a Hollywood veteran, "which means the avoidance of responsiblity."

"The American Dream," says a Mexican migrant worker, "is the same as a saying from my people: Hope dies last!"

The seven cast members, who balance each other so neatly that none either falls out or rises too high, are all local people. Two, in fact, are hometown kids: Ezra Knight and Stacy Saunders were graduated from Arlington's Wakefield High School two years ago.

The cast also doubles as the stage crew for the quick-change sets, part of Lyttle's crisp, professional directing that holds the audience through the widely disparate scenes.

Lyttle deserves most of the credit here for a thoughtful, fun evening that could easily have been sloppy, confusing and endless.

"Dreams Lost and Found," directed by Robin Lyttle, Feb. 5 and 6 at 8 p.m. in the Gunston Arts Center Library, 2700 S. Lang St., Arlington. A $2 donation is requested at the door. Call 558-2161 for more information.