To hear some Democrats tell it, this is the year North Carolina decides if it is part of the progressive New South" or a museum of the mossback politics of the Old South.

The prospect that it might choose the latter sends liberal Democrats in Raleigh and the proud university types of Chapel Hill up the wall. For a quarter of a century, they've thought of their state as two or three cuts above the rest of the South, a place of racial moderation, progressive government and fine universities.

But their fears carried little weight at the Tomahawk Cafe in this eastern Carolina town of 5,000 Saturday, Repubican Sen. Jesse Helms, who bills himself as America's leading conservative spokesman, was in town. And the people loved it.

"Have you seen any liberals? I haven't. We just don't have many of them in this part of the country," said Hugh Jones, a luriber company owner. "We have only one question: what Democrat does Jesse want us to vote for Tuesday so we can beat them in the fall?"

Jones and most of the 60 other people who came here are "Jessecrats" - registered Democrats who helped elect Helms to the Senate six years ago.

They have their own view of what progressive mean. Their view helps explain why Helms, 56, is at once the most loved and hated politician in the Tarheel State and why the Democratic establishment is worried that Helms, a former Democratic, will win reelection to a second Senate term in a state where Republicans are outnumbered 3 to 10.

To his supporter, Jesse Helms is a decent man who isn't afraid to stand up and say what he thinks about big government, the rascals in Washington or the U.S. Senate. He is a familiar figure who they learned to know and respect as a television and radio commentator, a North Carolina version of Eric Sevaried.

In tomorrow's primary, eight Democrats, including the son of a popular former governor and a state insurance commissioner waging a populist campaign, are seeking the right to oppose Helms.

Both parties see the race as a national testing ground between right and left. Helms, who rose to prominence through his support of Ronald Reagan at the 1976 Republican convention and his opposition to the Panama Canal treaties, is unopposed in the primary but has already raised more than $3 million and built up a direct mailing list with more than 135,000 donors from around the country who want to keep an articulate conservative spokesman in the Senate.

"It is a critical race because we [conservative Republicans] have been pretty much wiped out of the south," says Helms' campaign manager, Tom Ellis, a Raleigh lawyer. "Strom [Thurmond] and Jesse are about all we've got left."

The moderate Democrats who control the state party machinery see the race in a different light. They regard Helms as being tied to segregationist politics of the Old South since the 1950s.

"Type of image this state needs is one of strong, agressive leadership." Gov. James B. Hunt Jr. declares. "Jesse Helms is obviously not part of that image."

For the Democratic candidates, there's one overiding issue in the primary: who can beat Jesse Helms in November?

The acknowledged frontrunner is Luther Hodges Jr., a former Charlotte banker. A recent poll by the Ralepgh News and Observer showed him with a commanding lead of 22 percentage points over his nearest rival, state Insurance Commissioner John Ingram. State Sens. Lawrence Davis of Wingston-Salem and McNeill Smith of Greensboro trail even farther.

The same poll showed Hodges leading Helms 42 to 30 percent, with Ingram only slightly behind Helms. Ingram, has accused Hodges, who has raised $825,000 so far, of trying to buy the election.

To avoid a runoff election May 30, Hodges must win more than 50 percent of the vote, a questionable prospect in the crowded race.

Hodges has wraped his well-financed, media-dominated campaign in the cloaks of "the New South." A graduate of the Harvard Business School, he became chairman of the largest bank in the state at age 37. His father, Luther Hodges, was one of the state's most popular governors and a member of President Kennedy's Cabinet.

Hodges is running as a banker with a social conscience, a man more interested in the problems of tobacco farmers in North Carolina that international issues of the day - a slap at Helm's opposition to the Panama Canal treaties.

Hodges' television ads are slick and plentiful. But his inexperience (he has never run for elective office) is evident on the stamp.

When he was asked if he had ever smoked marijuana, he told a group of University of North Carolina students, "I tried it. But I don't smoke, so it didn't do anything to me." When reporters buttonholed him later, however, he said he had never actually, tried marijuana but he didn't want to admit that in front of a group of the students.

Whether North Carolina voters will buy his New South approach is a matter of conjecture. The state's progressive image has always been based part on myth, part on reality.

The state avoided the racial turbulence that swept the South during the 1950s and 1960s. Its university system is regarded as one of the best in the region and the Raleigh-Durham-Chapel Hill are claims more resident Ph.D.s than any place in the country.

But the state is basically a blue-collar one. Its industrial wages are the second lowest in the nation. The average adult has only an eighth-grade education and North Carolina has one of the highest numbers of house trailers in the country. Then too, the tradition of racial tolerance has been drawn into question with the Joan Little and the Wilmington 10 trials.

The Helms campaigners think their candidate is tailored perfectly to the state, and that he has firmly established himself as a crusader among rand-and-file voters.

Across the South this year, ex-segregationist politicians are paying homage to the increasing strength of blacks in the voting booth.South Carolina Sen. Strom Thurmond, up for reelection, has placed his six-year-old daughter in an integrated school in an acknowledgement of the changing times.

But Helms says he plans no such overtures. "I think it would an exercise in futility which isn't consistent with my philosophy or record . . . If you start trying to buy any group with promises you can't deliver, you not only are phony but you are deceiving yourself."

Race isn't an issue in this campaign, although when Helms was asked if he thought segregation was wrong, he said, "Not for its time." He added that time had passed.

On the stump he's as smooth and Southern as a fine Kentucky bourbon. He is polite, he is courtly. He avoids standard handshaking tours, but when he finishes his speech he takes time to talk at length with anyone who happens to linger.

His favorite targets are labor bosses, welfare chiselers, bureaucrats, liberals and the Senate. "If you felt a little bit more serene than usual yesterday," he said in Ahoskie, "it was because the Senate wasn't in session. No more bad laws were passed and they had no more canals to give away."