IT WAS NECESSARY for Lt. Col. Oliver North to have the chance to address allegations that he had taken personal gain from the covert operations in which he had a part. It afforded him the opportunity, which he used to the hilt, to present a portrait of himself as a brave, selfless, honest and much put-upon man whose life and family had been under terrorist threat. His testimony on issues of personal conduct may not have been the last word: he observed he still faces the ''extraordinary, unbridled, enormous investigation'' of an independent counsel, and there will be further questioning by the committee.

But Col. North's personal character, though an interesting subject, is not the central issue before the committee. The hearings' essential purpose is to provide a full public account of what happened in the Iran-contra affair, an account that will get to the bottom of the abuses of secret power that marked the government's action. So it was that Col. North's second day of testimony, though it went heavily into his personal conduct, began also to cut toward core issues of the process and substance of policy.

By virtue of his talents and the recognition they brought him, Col. North operated on a stage far grander than someone of his rank could otherwise have commanded. He is satisfied that what he did was 1) right, 2) known and approved by higher authority and 3) legal.

He remained unshaken yesterday in his insistence on his own rectitude -- aside from the admitted error of backdating documents on his home security system. The ''lies'' he admitted giving to Congress he sought to excuse by citing the ''lives'' supposedly saved by telling them -- a self-serving reading powerfully challenged by Senate committee chairman Daniel Inouye.

The witness' assertion that his every act was approved began taking the hearings to the vital and politically volatile question of specifically who did the approving. Yesterday some names were named.

On the subject of the Boland amendment, far from conceding error, Col. North depicted the turn to new means of financing as a way to comply with, as he understood it, Boland's ban on the use of appropriated funds for an intelligence operation. This is the working and still current North view. But it is pure Alice in Wonderland. The whole apparatus of concealment that the Reagan administration constructed around its secret operations belies the contention that there was no problem of law.