Dutch authorities and South Moluccan terrorists holding 60 hostages in a train and school near here have agreed to employ mediators to try to end the 10-day old siege, but both sides rejected each other's candidates for the job today.

Early yesterday, the gunmen proposed two persons to serve as mediator. The Dutch government rejected the choices today as too radical and suggested two other persons, who the guerillas later called unacceptable.

In talking the initiative to employ arbitrators, the terrorists dropped another of their stands. Last week they warned if anybody approached them as mediators, "people would be killed."

Justice Ministry officials refused to reveal any names, but informed sources said one negotiator requested by the gunmen was Kris Paais, a radical yound Moluccan.

The sources also said a counter offer made by the Dutch Government included the name of a Dutch hostage in the Moluccan train kidnap incident in Beilen, 18 months ago, who became sympathetic toward the Moluccans' efforts to gain independence for their homeland islands, now part of Indonesia.

This afternoon, another tense "game" was played between the gunmen and Dr. Dick Mulder, the Dutch psychiatrist in charge of negotiations for the government.

The terrorists aboard the train called the Dutch crisis center here and asked for a medical squad to rescue a man who had fainted. A trolley with a stretcher was wheeled down the tracks to the isolated train, but it returned empty. Another hostage on the train, medical student Nellike Ellenbroeck, 25, later told Dutch authorities the man ahd suffered a dizzy spell but regained consciousness.

Mulder grew angry about what he considered callous treatment of the sick captive and there was a "vehement and emotional exchange" by both sides, Justice Ministry spokeswoman Toos Faber said.

The gunmen earlier refused to honor pleas voiced by the Dutch government to release an ailing woman who is seven months pregnant.

The last of the 105 school children freed last Friday were released from hospitals today. The cause of the presumed "infectious disease," which prompted their liberation from the besieged school in the village of Bovensmilde, remains a mystery.

A team of doctors from Groningen University Hospital will launch a program of psychiatric rehabilitation next Monday to soften the traumatic impace of the pupils' four days in capitivity.