From a bluff on the Maryland side of the Potomac River's North Branch, a $105.9 million construction project is an extraordinary sight.

Ant-sized men, dragging hoses for pneumatic drills or driving giant pieces of equipment, clatter up a West Virginia mountain, preparing its side to hold the Bloomington Dam. In 1980 or 1981, it will begin storing water for Washington.

Already much work has been done. The Western Maryland Railroad has been moved from the floor of the Potomac Valley in West Virginia to the side of a mountain in Maryland, 300 feet higher.

With that problem solved, the few remaining residents of the former community of Shaw, W. Va., were relocated, their homes destroyed and their town leveled. It will be under water. Two cemeteries have also been moved.

A giant tunnel, 15 feet high, has been bored in the side of the mountain. It will carry the Potomac River, in carefully controlled slugs of water, from behind the dam to the main streambed again.

And where the Potomac once flowed, an earth-and-rock dam will be built from the streambed up - 1,640 feet across at the base, 2,130 feet long and 296 feet high.

It will store an ecologically deadlake. Acid draining from long abandoned deep-mine shafts in Western Maryland and West Virginia has so polluted the Potomac and its tributaries-here that absolutely nothing can live in the water. It will be of limited value for boating, because the acid will corrode a metal-bottomed boat. The floodgates will be stainless steel.

That acid will be diluted by the time water from Bloomington reaches Washington. "In fact, we think we can improve the river quality by controlling the acid flow," said Bob Craig, the Corps of Engineers construction chief here.

There was not much opposition to the Bloomington Dam in this area when it was first proposed in 1962. Margaret Green, who runs Green's Restaurant in nearby Westernport, said, "I think it's long overdue. It seems foolish they would have held up on this as long as they did. Washington needs the water, doesn't it?

"I can remember when the river used to come up to the sidewalks and flood us every spring. This will give us more protection."

Ten miles away, in New Creek, W. Va., Peter Pritts runs the Potomac Lumber Co. He, his four brothers, and the lumber company used to be part of Shaw, W. Va.

"I had an old house," he said. "The corps paid me well for the house. But when you go to moving out what you have accumulated in 40 years. . . ." His voice trailed off.

"I swam in that river when I was boy. We used to go swimming on Easter Sunday, even if we had to break through the ice to do it. Always had to take a bath afterwards, because of the acid."

Shaw, he recalled, once had two Liftle League baseball teams, then one then none. Nobody stayed but the old folks. The metropolitan press, he said "tried to make those people in Washington think this was nothing but desolate wilderness."

In the past three or four years - since relocation and construction began, Pritts said, "12 to 15 elderly people who lived in that community have died. I think this thing scared 'em to death. We didn't fight it. The people kind of went along with it."