Falmouth Road normally is a quiet residential area of elegant homes and well-tended yards, much like the ones that appear on the covers of the home and garden magazines. But there are times when this tranquil section of Bethesda is transformed into a hustling, bustling scene featuring powerful world figures.

It starts with a knock on every door, and an order that all the cars must be removed from the street, either placed in driveways or garages or parked several blocks away.

The street is then closed at each end, and on occasion, the yards in front of residents' homes are cordoned off with yellow rope. Pedestrians trying to get to homes within the restricted areas may be required to show identification, and their purses and bags may be checked for weapons.

Meanwhile, overhead, a helicopter makes a last-minute aerial security sweep. A squad of police motorcycles careers up the street. Police cars appear with red lights flashing and sirens wailing. Finally, there is the big black limousine delivering a special guest -- the Soviet foreign minister, the Israeli prime minister, the prime minister of India or even President Reagan.

Welcome to the neighborhood where Secretary of State George Shultz and his wife Helena live -- and entertain.

Residents along this pleasant winding street say the security measures have been a bit of an imposition. But by and large, the neighborhood seems to be coping. The security "hasn't bothered us at all," said Elizabeth Blondel, who lives next door to the Shultzes.

Ann Hagenbucher, who lives three doors down from the Shultzes, said, "It has been inconvenient because they require us to move the cars off the street -- and we have five cars." In addition, Hagenbucher said, "I worry that our dog -- he is a big dog -- might get loose and jump on somebody and they [the security people] would club him." Still, she said, "we haven't had any real problems, and if they [the Shultzes] are going to live there, I'm glad to have the security."

Gilmore Flues, who lived across the street from the Shultzes until recently, said he had to show his driver's license on one occasion to get back to his home, which was inside the restricted area. "Maybe some people got a little irked about it, but what would you expect -- the man has to have security," Flues said, "and I would say it was no problem for us."

At least one resident, however, is outraged about the way the secluded neighborhood, which is a part of the prestigious Westmoreland Hills area, has been altered since Shultz moved in three years ago. Virginia A. Heffernan contends that the security turns Falmouth Road, where neighbors have a penchant for privacy, into a "circus" that interferes with the lives of the residents.

Heffernan, who has lived on the street for 23 years, said that Shultz's security means that joggers are sometimes stopped and asked to show identification in the neighborhood and armed men patrol the streets and yards. Heffernan, whose husband James is a Washington lawyer, said she is glad that her five children now are grown and living in their own homes, where they aren't subject to the restrictions that now are imposed on Falmouth Road at times.

"I am as American as you can get," explained Heffernan. "My family goes back 200 years in this country, and we value individual freedom and the right to come and go as we please. This is not a country where you have to carry a passport. And yet, it is horrifying that this is happening on my street."

One recent morning, she said, "I woke up at 7:30 a.m. . . . and heard motorcycles in the street. I looked out the window and saw six motorcycles in my front yard and a police car blocking my driveway."

The occasion, as it turned out, was a breakfast for visiting Israeli Prime Minister Shimon Peres.

Heffernan protested to her congressman, Rep. Michael Barnes (D-Md.), and he sent Shultz a letter saying that while there may be a need for tight security, "particularly when the president is visiting the neighborhood," the situation should be handled "with more sensitivity."

After the president and the vice president, the secretary of state is regarded as one of the most likely targets of an attack, officials say, because he is widely known around the world and because he meets regularly with world figures who are themselves potential targets.

But unlike previous secretaries of state, Shultz is thought to be the first to entertain important foreign dignitaries in his home.

"We never did that," said former senator Edmund S. Muskie, who served as secretary of state under President Jimmy Carter. One reason, he said, was that he and his wife Jane lived in a small town house condominium that made entertaining difficult. Another reason, he said, was that they did not have to entertain at home because the State Department offices in Foggy Bottom already have the staff and the furnishings needed for formal and informal entertaining.

Jane Muskie asked: "Why would they entertain at home when the eighth floor [of the State Department] is more beautiful than the White House?"

State Department spokesman Charles Redman said Shultz entertains at home "to give a more personal touch" and, in some cases, to reciprocate similar hospitality that he has received when visiting foreign leaders. Redman said that Shultz entertains "infrequently" at home, less than a dozen times since becoming secretary of state on July 16, 1982.

Among those who have visited the Shultzes in their $365,000 home in recent weeks are Peres, Soviet Foreign Minister Eduard Shevardnadze, who came to dinner in late September, and Indian Prime Minister Rajiv Gandhi, who was there for dinner in June.

President Reagan and his wife Nancy also went to the Shultzes' home for dinner in June. Each time, the Secret Service provided maximum protection, with the help of local police.

Capt. Michael Blasher of the Montgomery County police said police provide support for the Secret Service by directing traffic and blocking off Falmouth Road. "Does it inconvenience people? Probably so, but most accept the reality of the situation," Blasher said.

When Virginia Heffernan wrote a letter to Shultz during the summer, expressing her concerns, she received a note of apology from him. The note, dated July 3, said:

"I am sorry you were upset with the goings-on on our street last Sunday evening. Mrs. Shultz and I had invited the President and Mrs. Reagan over for dinner, and security considerations mandated the presence of police, the barricades, and so forth. I regret any inconveniences this may have caused you. With best wishes. Sincerely, George P. Shultz."

Because of the continuing security problem, Congress has authorized a study of the possibility of acquiring an official residence for the secretary of state through a gift to the federal government, Redman said.