Egypt's hopes for quick peace and the heady dreams of instant prosperity to follow have faded, but so has the fear here of disastrous consequences should President Anwar Sadat's bold peace initiative fail.

Egypt has calmed down after months of excitement and turmoil touched off by Sadat's visit to Jerusalem. Sadat, in safari suit, has gone off to Upper Egypt to look at new industrial and agricultural projects, and the hottest debate in parliament is over potential damage to the pyramids from a resort development in the nearby desert.

There is no Egyptian counterpart to the furious debate in Israel over Prime Minister Menachem Begin's negotiating positions. This country has an increasingly lively political opposition that is having fun blasting Cabinet officials and leader of the ruling party in the newspapers and in parliament. But its differences with Sadat are confined almost entirely to domestic issues.

By all accounts, most of the 40 million Egyptians support Sadat both in his offer to make peace with Israel and in his refusal to do it on Israel's terms. If Egyptians are disappointed and angry over the lack of results, their resentment is directed not at Sadat but at the Israelis and to a lesser extent at the Arab rejectionists who oppose Sadat's peace campaign.

There is, moreover, a realization among Egyptians that they and the Israelis entered into the peace talks with completely different perceptions of what was involved and how to proceed. As they see it, they made a munificent and all-encompassing offer of recognition, legitimacy and peace in exchange for teritory. They were taken aback when Israel regarded the offer as merely the starting point for hard bargaining.

In a Western country, a venture like Sadat's that raised popular expectations so high might bring down the government or at least touch off furious protest if it failed. Predictions of similar consequences here have not been borne out for several reasons, Egyptians say.

One is that popular sentiment here is easy to manipulate. Another is that most people really believe the responsibility for the breapdown in peace talks lies with the Israelis. In addition, many sophisticated Egyptians say that if popular unrest does surface here it will be over economic conditions, not external affairs.

It is now openly accepted that Sadat failed in his attempt to break out of the shopworn diplomatic channels that, in his view, were leading nowhere.

One Egyptian official who took part in the abortive peace talks describes himself as "fed up" with the entire process. Another says bluntly that "Sadat tried a short cut to peace and found it didn't lead anywhere."

The Egyptian press, which mirrors official thinking on international issues, acknowledges that an impasse has developed. Editorials here say the recent shuttle mission of U.S. special envoy Alfred Atherton accomplished nothing, despite his statements that he succeeded in narrowing the gap between Israeli and Egyptian peace terms.

"Even if we achieve this declaration of principles that we are seeking, do you think that is the end of the road?" An authoritative Foreign Ministry official asked in a reflection of the somber new atmosphere. "Not at all. We're talking baout years, may be five years, maybe 10."

Nevertheless, he and other informed Egyptians say that the whirl-wind of events since November has changed the political climate of the Middle East and swept away some old notions, with results that cannot yet be fully comprehended.

Sadat, in their view, has demonstrated that peace with Israel is politically popular. He has exposed the Arab rejectionists as paper tigers, sulking on the sidelines and unable to agree among themselves on a program to foil Sadat.

Perhaps most important, he has helped to drive a wedge between the Carter administration and Israel. The Egyptians have often complained that Carter has proved unable or unwilling to translate his Middle East polities into effective action, but little has been heard of that since Sadat's visit to Washington last month.

Egypt is also pleased with the U.S. decision to sell combat jets to Egypt and with the repeated U.S. criticism of the Israeli settlements in the occupied territories.

Sadat is said to understand that the Americans are not going to put overt pressure on Israel, in the form of a threat to cut off aid, to induce the Israelis to change their policies. Yet, the Egyptians are looking for some indication that Israel will at least make a new offer on the key questions of the Palestinians and the occupied territories - perhaps during Begin's visit to the United States next week.

Atherton reportedly assured the Egyptians that if that visit fails to produce suggested language for a declaration of principles that both sides can accept, the United States will offer language of its own. In the Egyptian view, that would be desirable because they see the U.S. view as closer to their own than to that of Israel.

If that does not work, then what?

The answer, according to well-placed Egyptian officials, may lie in the joint communique that was issued after Sadat's stopover in Romania on his return from the United States.

The document, which attracted little notice, says "it would be useful for all parties concerned to participate in the Cairo preparatory conference . . . and in the meeting which the United Nations secretary general proposed in New York or in any other place to make new preparations for the resumption of the Geneva conference."

In Cairo, "Geneva conference" is a code word for an overture to the Soviet Union, the conference cochairman. A meeting under U.N. auspices, which Egypt accepted in principle when it was proposed could provide a face-saving formula for Egypt to mend its relations with Moscow and with Syria, effectively ending the brief era of bila negotiations between Egypt and Israel.