The only adult American hostage aboard the hijacked Lufthansa jetliner broke into sobs yesterday as she told reporters in Frankfurt of a raving terrorist leader who railed against Jews and laughed when he shot the pilot.

Mrs. Christine Santiago, 44, of Santee, Calif., said she feared for her own life throughout the ordeal, and was terrified over the possible fate of her 5-year-old son, who was with her.

Mrs. Santiago said the hijacking began about an hour after the Lufthansa jet took off from Mallorea. "A girl stood up with two hand grenades in her hands," she said. "Another man had a gun and went to the cockpit screaming in Arabic. There were two men and two girls."

The leader of the hijack team, a man who called himself Captain Mahmoud and said he was a Palestinian, was described by Santiago as a Jew-chater who who constantly flew into rages.

"He got these spells," said Santiago. "When he went into rages, it was terrible."

She said the first act of the hijackers was to take away the passsengers' passports and all other forms of identification. She said "Captain Mahmoud" told them: "Don't forget anything or you'll be executed."

"He was checking to see if anyone was Jewish," Santiago said. "He said his people were Palestinians. He checked watches and jewelry to find any Jewish star.He said the Jews were his enemies."

Santiago said there were three young women aboard the flight who admitted to being Jewish, and "Captain Mahmoud" said "they would be executed in the morning."

"Then he changed his mind and told us he wouldn't execute 'these three pigs,'" she said.

Santiago also related how the hijackers shot Lufthansa pilot Joergen Schemann, the only hostage to die in the ordeal.

When Schumann left the plane in South Yemen, ostensibly to check the damaged front landing gear, he attempted ot flee. "Captain Mahmoud" threatened to blow up the aircraft on the spot, she said, and the Yemenis returned Schumann.

[TEXT OMITTED FROM SOURCES] pen," said Santiago. "He ran down the aisle and then fell on his knees begging for mercy."

The hijack leader, she said, "told him to shut up and shot him in cold blood. And then he laughed."

New details also continued to leak out yesterday on how the West German commando squad freed the hostages.

The U.S. ambassador in Somalia, John L. Loughran, said members of the special unit known as GSG-9 crept to within 200 yards of the nose of the plane and set off several "flash" grenades that emited a blinding light - drawing the hijackers to the cockpit.

Other commandos then pulled down the door in the rear belly of the plane from the outside. Racing up the stairs, they rolled special concussion grenades under the seats in the cabin.

The concussion grenades, supplied by British anti-terrorist experts, have a cardboard cover so they do not spray shrapnel when they explode. The deafening roar and flash from the grenades paralyzed the passengers and terrorists for an estimated six seconds - time enough for the commandos to race forward and surprise the hijackers in the front of the plane.

West German Interior Minister Werner Maihofer said the commandos killed two of the four terrorists in the cockpit after "determined resistance."

Another terrorist in the first class compartment, Maihofer said, the commandos from there. Although hit by two bullets, Maihofer said, the hijacker then hurled "a hand grenade toward the rear of the plane. This exploded under a seat.

"And after this terrorist was hit by more bullets, he detonated another grenade even while falling, which injured several hostages in the feet," Maihofer said.

When this third hijacker had been killed, Maihofer, said, the fourth terrorist - a woman - opened fire on the commandos through the door of a toilet compartment in the rear of the aircraft. She was wounded by the troops and was reported recovering yesterday in a hospital in Mogadishu.

Less than six minutes after the commandos charged into the plane, they were shepherding the freed hostages out of the aircraft.

"The first I could see was when groups of passengers, looking bewildered and numb, came out of the darkness," said U.S. diplomat Ralph Crawford, who was waiting in the terminal 2,000 yards from the plane.

"The Somali airport workers and officials and the spectators ran forward to hug the passengers. There was shouting and laughter," said Crawford. "What a scene - it was like New Year's Eve."