Republican Steve A. Armstrong readily admits that he's a long shot in the race for the 35th District seat in the Virginia House of Delegates. His opponent, Democratic Del. Dorothy S. McDiarmid, was first elected 28 years ago and has accumulated considerable political and financial clout.

Besides, Armstrong candidly acknowledged, "I'm not really campaigning that hard."

But in an election year when most General Assembly candidates sound alike -- a standard pitch is that Northern Virginia needs less traffic and more state money -- Steve Armstrong stands out.

"Our transportation system is horrible, but it's just a symptom" of too much state power over local problems, Armstrong contends. "The state controls the highways, and it's been fooling around for years not getting things done . . . . The power ought to be with those who are here to answer to the voters."

McDiarmid, who as chairman of the House Appropriations Committee has her hands on the state's purse strings, takes a more traditional view of things.

"People are absolutely frustrated about transportation, but I think Gov. {Gerald L.} Baliles has taken the first steps toward reaching a solution," McDiarmid said. Baliles pushed the legislature last year to adopt a legislative package that raised taxes and dramatically increased state spending on roads.

"I'm very happy about Northern Virginia's relationship with the rest of the state," McDiarmid said. "I think it's improved so much. We have more money for roads, we have George Mason University. I think {local lawmakers} are more professional in the way we present our needs to the legislature. And besides being able, we are also friendly."

The area that McDiarmid and Armstrong are vying to represent, the 35th District, is the geographic center of Fairfax County, stretching from Falls Church west through Vienna and around the Tysons Corner area. Its residents are in many ways typical of those throughout the county: transient, mostly upper-middle-class whites.

For the major political parties, the 35th is competitive turf. President Reagan, a Republican, got more than 60 percent of the vote here in 1984, but Baliles and former governor Charles S. Robb, both Democrats, won about 54 percent apiece in their gubernatorial campaigns. Two years ago, McDiarmid got about 60 percent of the vote.

Over the past three decades, McDiarmid has become a political fixture in Fairfax. During her first race in 1959, she campaigned as a former teacher and civic activist who opposed efforts to close downstate public school systems rather than integrate them. She has been beaten twice -- during Republican upsurges in 1961 and 1971 -- but on both occasions was returned to office two years later, giving her a total of 24 years in the House.

In 1986, she took over as chairman of the House Appropriations Committee, a position that gives her considerable influence over the state budget. A newspaper survey ranks her as one of the most effective members of the House. Last year she was awarded an honorary doctorate by her alma mater, Swarthmore College.

While her seniority is a decided advantage in the General Assembly, she is sensitive about her age, describing herself in recent years only as "over 70." According to a House of Delegates manual published in 1962, today is McDiarmid's 80th birthday.

Armstrong, who describes McDiarmid as "a bright, sharp person" and "a lovely lady," quips that her age should be an issue "only to those Democrats who think President Reagan is too old." Reagan is 76.

Armstrong, 54, has only one previous venture into politics -- an unsuccessful race for the Fairfax County Board of Supervisors four years ago -- but he has a long history in the district, where he has lived for 16 years. He retired from the Marines as a major in 1975, practiced law and taught for 10 years, and served as president of a computer software firm in 1985 and 1986. He continues to practice law but takes only pro bono cases that interest him.

He describes his race against McDiarmid this year as "doing a little reconnoitering" for 1989, when he expects that she will not seek reelection. Armstrong has raised only about $1,000, far less than McDiarmid's treasury of about $45,000. He has scheduled no appearances with his opponent and has established little if any presence on the traditional political circuit.

But Armstrong has no shortage of ideas about how to run state government, which he generally describes as too restrictive. He wants to abolish Virginia's status as a "Dillon rule" state; the rule greatly reduces the power of local governments and increases the authority of the General Assembly.

He supports the popular election of school board members and judges, all of whom are currently appointed, and the initiative and referendum process for enacting laws, which Virginia does not allow.

"State government has generally tried to do the same old things that enrich the same old crowd down on Richmond's Main Street," Armstrong said. "It's controlled by an elitist group that's going to run things for the rest of us."

McDiarmid stresses her role as chairman of the Appropriations Committee, calling it "a constant immersion in the problems of the state" and pointing out that she can help bring money home to Northern Virginia.

Armstrong "has complained bitterly that we don't get enough money back," McDiarmid said. "Well, the times are changing. Northern Virginia is in the best situation we've ever been in, and I hope to make it better."