THE SELECTION of W. Richard West as chairman of the American Indian museum on the Mall moves that important project a step forward. Because Mr. West is both a Cheyenne-Arapaho Indian himself and a lawyer who has spent his life immersed in Indian causes, the appointment also serves as a reminder that this museum has more than just an aesthetic mission. As important as is the recovery and display of Native American culture that the museum is charged to carry, the process of building and defining that culture in a museum will have political dimensions as well, and in fulfilling them the museum can expect to grapple with political conflicts. Dean Anderson, the Smithsonian Institution undersecretary who chaired the search committee for Mr. West, speaks of it as carrying something of a "mini-United Nations" function, linking the concerns of the more than 200 recognized tribes in this country with issues that range from ownership of sacred and ceremonial objects to the philosophical and intellectual challenge of putting those many cultures in context.

The practical challenges will also be substantial. The legislation that established the National Museum of the American Indian, and arranged for the transfer here of New York City's unrivaled collection, has three parts. One is to renovate the current headquarters of the collection, the Custom House in Manhattan, so that it can continue to mount exhibits. Then there are to be two new facilities: a major museum next to the Air and Space Museum, mainly for display, and an archive, research and storage facility in Suitland. But planners have broader ambitions than that for the two new Washington facilities. They see them as an anchor of scholarship on Indian issues, a magnet for graduates of the slowly burgeoning Indian tribal college movement and a place that will focus Indian cultural awareness generally -- all fitting functions for the nation's capital.

These dreams are expensive, of course, and Congress in its current straitened budget condition has yet to appropriate any money at all to fulfill them. But they are worthy dreams, whose fulfillment would mark a significant step toward maturity not just for one group but for Americans as a nation.