All kinds of things seem suddenly to be happening in the bizarre case known as Pennzoil v. Texaco. The Securities and Exchange Commission, in a highly unusual action, is getting into the act. Pennzoil for the first time is retreating from its demand for an $11 billion pound of flesh. And down in Texas a faint fire is being kindled on behalf of judicial reform.

The case, for those who came in late, began in December 1983, when Pennzoil made an offer to buy a 42 percent interest in Getty Oil Co. at $100 a share. At least some of the parties reached an ''agreement in principle,'' but before a binding contract could be signed, Texaco came forward with an offer to buy 100 percent of the stock at $125 a share. This understandably looked better to the Getty entities, and by late January Texaco had bought itself what it thought was a bargain.

What Texaco bought was a Texas-sized lawsuit. In February, Pennzoil went into the 151st District Court of Harris County, Texas, asking $15 billion in damages for breach of contract. The Pennzoil theory was that even though no valid and enforceable agreement had been executed, the parties in effect had shaken hands on the deal. In Texas, where a man's word is his bond, that's a contract, son. In November 1985 a jury agreed. The jury awarded Pennzoil $7.5 billion in compensatory damages and $3 billion in punitive damages. With interest, the award now amounts to something astronomical.

This past April, after the U.S. Supreme Court refused to get involved, Texaco took protective bankruptcy. The Supreme Court ruled that the company had not exhausted its remedies in Texas, and thus passed the buck -- or the 11 billion bucks -- back to a state judiciary, in which some most peculiar things go on.

The jury's award was wildly unrelated to the damages, if any, that Pennzoil had suffered. The compensatory damages were predicated on some hypothetical reckoning of what Getty's reserves might be worth some time in the future, if drilling costs were thus-and-so, and if the world market were thus-and-so. It seems to be undisputed that the case should have been tried under New York law, because that is where Texaco is based, but the final trial judge publicly conceded that he was no great shakes at New York law. Texaco's lawyers are fuming, and the legal fees are making a hundred attorneys rich.

In Texas judges are elected in partisan elections. They solicit campaign contributions as openly as any candidate for county sheriff, and if contributions come from lawyers who practice in a judge's court, well, that's just the Texas way of doing things.

In the case at hand, within a month after Pennzoil had filed its suit, Pennzoil's lead counsel, Joseph Jamail, gave a $10,000 contribution to the pretrial judge in the case, Anthony Farris. Months later, when this little ol' contribution became known, Texaco asked Farris to disqualify himself. The judge who heard the recusal motion said it would play havoc with the judicial system if Texas judges had to step aside merely for the appearance of impropriety. So Farris stayed on until illness put him on the sidelines. The trial was concluded before Judge Solomon Casseb, a retired judge with a high regard for handshakes.

This week the SEC will file a brief with the Texas Supreme Court urging that the court hear Texaco's appeal on a narrow question of securities law. The rule, somewhat oversimplified, is that a suitor such as Pennzoil cannot negotiate publicly and privately at the same time. It's a technical point and may not matter greatly.

On July 20, Pennzoil proposed a deal that it believes Texaco can't refuse. To get out of bankruptcy, Texaco would pay all its creditors in full, and Texaco would settle with Pennzoil for a modest $4.1 billion, plus interest. The offer was accompanied by the calumny that has marked exchanges between the two antagonists since the feud began.

Meanwhile, back in Texas, to the amazement of the Texas press, the State Commission on Judicial Conduct publicly rebuked two justices of the State Supreme Court for misconduct. In Austin, there arose something less than a clamor for judicial reform, including a few voices urging nonpartisan election or merit appointments of judges. Austin has heard all this before.

Will Texaco come up with its own reorganization plan? Will some sensible appellate court nullify the outlandish judgment? Like TV's ''Dallas,'' this is soap opera stuff. Stay tuned.