The intrusion of rivalries and side issues helps explain why Arab leaders opposed to Egyptian President Anwar Sadat's initiatives toward Israel are bogged down in their deliberations here.

Algeria, Iraq, Libya and Palestinian extremists appear as concerned with promoting their own special interests - and justifying their own past intransigence - as with adopting compromises necessary to take practical steps against Sadat.

Running throughout the proceedings is the knowledge that in the event of a much-feared Israeli-Egyptian separate peace they all would be militarily at Israel's mercy.

Naef Hawatmeh, leader of th Marxist Democratic Front for the Liberation of Palestine, told reporters: "Israel can win a war and even perhaps occupy new lands."

His Marxist rival, George Habash, leader of the Popular Front for the Liberation of Palestine, conceded that "no one can make the decision to fight" because of Israel's present military superiority.

But for Habash, leader of the "Rejection Front" - so called because it refuses any dealings with Israel, the conference is the occasion to force rival Yasser Arafat, to admit his errors. Habash condemns Arafat for leading his Palestine Liberation Organization and its mainstream followers into the paths of negotiation.

Neither Arafat nor his erstwhile enemy and present ally, President Hafez Assad of Syria, seems willing to slam the door on hopes for a negotiated settlement.

The Sadat Initiatives have allowed Habash to promote his standard insistence that the Egyptian leader is part and parcel of "reactionary forces" in Saudi Arabia, Sudan, Morocco and other conservative countries who now have come into the open with what he calls an alliance with Israel.

Habash has always argued that Israel will be toppled only after Arab revolutionaries have overthrown the conservative Arab regimes in a "people's war."

Intimidating Saudi Arabia and other conservative governments is a major objective of some of the Tripoli conference participants.

So, too, is forcing Syria and the PLO mainstream to end their financial dependence on Saudi Arabia in favor on such radical backers as Libya and Iraq.