Residents of this tiny Eastern Shore town agree on at least one thing: Every summer, tourists clog the main drag, Talbot Street, intruding on the quaint, quiet atmosphere.

"You've gotta take a number to get through here," says Tommy Dobson, 35, a fourth-generation waterman who has lived here all his life.

What the townspeople cannot agree on is how to deal with the traffic of outsiders.

The town commissioners have endorsed a long-dormant state proposal for construction of a 2 1/4-mile, high-speed bypass to divert traffic around the town to the west. But hundreds of residents and people who live just beyond the town limits in Talbot County have protested that a highway would cause environmental damage and invite more tourist traffic.

Maryland has built several bypasses around towns on the Eastern Shore in the last decade and is considering others -- including one near Chestertown -- and state officials say the projects inevitably create local turmoil.

"Towns may think they need the road, but when people hear the word 'highway' you always get problems," said Edward Karas, assistant manager of the St. Michael's project.

Project Manager Frank DeSantis would not speculate whether the state will build the St. Michael's bypass, but he said he will consider local opposition "very seriously." Even if the project proceeds on schedule, construction would not be completed for at least seven years.

Founded by 17th century shipbuilders, St. Michael's boasts 1,300 residents, five churches and a narrow main street lined with antiques shops and real estate firms. To the east of Talbot Street, several seafood restaurants and a popular marine museum perch on the edge of a small marina. All the attractions are relatively uncrowded this time of year.

But warm weekends attract up to 1,500 shoppers, boaters and pedestrians. On-street metered parking and scarce lot space fill up quickly, residents say, and near-gridlock develops downtown.

After several particularly hectic summers, the town commissioners revived in 1983 a decades-old scheme to divert through traffic around St. Michael's with a two-lane bypass, commission president Ernest E. McMahon said.

"We need to move people who don't want to stop here outside of town to clear up our main street and make it livable," he said. The commissioners have the support of many merchants, who want to relieve congestion while encouraging more tourists to come.

When a platoon of state officials brought their blueprints to a hearing at the St. Michael's high school auditorium last week, however, the reception from the audience of about 300 was mostly hostile.

One after another, year-round residents and vacation-home owners criticized the construction plans, emphasizing, among other things, that the highway would require tearing down as many as six houses, increase noise levels, create dangerous intersections and attract heavier traffic and development.

The critics maintained that the town has failed to try alternatives, such as restricting on-street parking and building more parking lots. More than 350 persons, most of them year-round residents of the area, have signed a petition opposing the construction.

"We have a traumatic overreaction to the congestion problem," contends Richard S. Franzen, an Alexandria resident who owns a second home near the proposed construction site. "What's at risk is an environment that is totally unique, the place to which I go to escape from the urban setting."

"This is a small waterfront community fending off the megalopolis," said G.A. Van Lennep, 76, who first moved to St. Michael's in 1936 and whose waterfront home is in the path of one proposed road. Van Lennep and his wife, Vida, 74, spent years restoring an adjacent 17th century house called Crooked Intention, which is officially designated a historic landmark.

Van Lennep argues that one proposal to build an elevated portion of the road over nearby San Domingo Creek would end centuries of commercial oystering and crabbing, still a major business for St. Michael's.

"We see a certain way of life destroyed" by the proposed bypass, Van Lennep said. "This is our version of the last frontier."

But other town residents said in interviews that they support road construction plans.

Tommy Dobson, a waterman who for 20 years has moored boats at a small dock across from the Van Lennep property, says that he and most of his coworkers favor steps to improve business opportunities in St. Michael's.

"You're not going to keep it quaint for 200 years," Dobson said. "If people want to come, people are going to come."

Dobson said that people invoking the cause of the watermen "are probably really concerned about their property value."

As to the impact of an elevated highway over San Domingo Creek, Dobson says, "The oysters don't hear it, and the crabs don't care." No oystering is done in the creek inlet.

Several homes in a low-income black community on the northern fringe of the town also would probably have to be torn down to make way for the proposed road, but residents there are generally "openminded" about the construction, said George Henry Stanford, 55, a 25-year resident of the neighborhood. His house is not threatened, but sits close to the path of the proposed bypass.

"There's not much talk" about the bypass dispute, said Stanford, who favors the idea because "it's gotten so congested downtown you can't even get a bicycle through sometimes."