American officials have raised the prospect of the United States abandoning legal efforts to resolve the 1976 assassination of Chilean diplomat Orlando Letelier in favor of exerting strong diplomatic pressure on the military government of Gen. Augusto Pinochet.

Last Tuesday morning, a U.S. official briefly considered withdrawing the request for the extradition of three Chilean secret police officers charged with the assassination of Letelier at Washington's Sheridan Circle.

The idea of withdrawing the request - subsequently rejected - came during a phone conversation between assistant U.S. Attorney Eugene Propper, who has headed the Letelier investigation in Washington, and Alfredo Etcheberry, the Chilean attorney who is representing the United States in the extradition proceedings here.

Although Propper was dissuaded from formally recommending that the case be dropped - a decision that would probably have been accompanied by strong U.S. diplomatic measures against Chile - the incident indicates just how badly the case has been going for the United States since the extradition request was lodged last week.

What had outraged Propper, according to sources in Santiago, was a decision by Chilean Supreme Court President Israel Borquez to hold the extradition hearings in complete secrecy, a ruling that will make it impossible for Etcheberry to monitor the proceedings, cross-examine defense witnesses or clarify evidence gathered against the three Chileans in the United States.

Propper reportedly had reached the point where he thought that Borquez has so stacked the deck against the United States that it might be better to withdraw the case entirely rather than to continue, pretending that the judge was independent and capable of reaching a conclusion based solely on the evidence before him.

Instead of recommending that the case be withdrawn, Propper was persuaded to wait until Etcheberry has had a chance to review the way Borquez handles his personal - and solitary - investigation of the evidence gathered by a federal grand jury in Washington. This could be several months.

If it appears that Borquez has not done a thorough job, Propper might well recommend that the United States pull out before the Supreme Court president makes a final decision, according to sources here.

Borquez, the object of Propper's wrath, is a 73-year-old jurist with a wily political sense and a record of not challenging Chile's military government, which came to power five years ago and immediately set aside the constitution Borquez was sworn to defend.

Although theoretically independent of the government, he is generally viewed as a strong supporter of Chile's military rulers.

Borquez decided that all aspects of the proceedings would be secret, using discretionary authority that provides for extradition cases to be held in open session unless the judge has reason to believe that the proceedings will cause a public commotion.

Apart from his dislike of the press, Borquez is believed to have opted for closed sessions fearing that one or two months of open hearings could produce a stream of extremely embarrassing revelations about the military government's old secret police, the DINA, which has been charged with masterminding the Letelier assassination.

The Supreme Court president is now expected to begin his initial questioning of the three Chilean secret police officers this week. All three are currently in a military hospital in Santiago and Borquez is expected to take the unusual step of going to them, rather than requiring them to come to the court - which would create "picture opportunities" for waiting photographers and more unfavorable publicity for the government.

American officials here suspect that Borquez will do what the Chilean government wants him to do, possibly even going so far as finding the evidence insufficient to order a trial.

For its part, the government thinks that the United States is pressing the case as a way of embarrassing and weakening the Pinochet government, a military junta with a much criticized human rights record.

The government has gone out of its way to stress that it will leave Borquez free to make his decision, while the U.S. Embassy here has said on more than one occassion that the political motives ascribed to the extradition case do not exist.

The fact is that one of the three Chileans charged with Letelier's murder is Gen. Juan Manuel Contreras Sepulveda, the former head of DINA and a man said to have been extremely close to Pinochet.

If the evidence that Contreras ordered Letelier's death is strong and convincing enough, many Chileans would have trouble believing that Pinochet did not know about the plan to assassinate a man who was one of the government's most outspoken and effective critics.