When Margaret Jacocks, chairman of a Montgomery County citizens group called Code 3, began making allegations three months ago that county police chief Robert J. diGrazia had mismanaged his department, few people paid much attention to her.

Last Thursday, however, a county grand jury which has been investigating diGrazia had its six-month term extended in a highly unusual move.

And now, people are starting to pay attention to Peggy Jacocks and Code 3, which in police terminology means a "serious crime in progress."

"Peggy is one of the most intense people I've ever met," a friend said yesterday. "There's no question about the fact that she gets carried away with things.

"But she doesn't say something unless she has facts to back it up. She's accurate. I don't know that much about this police investigation, but I know she's incredibly involved and devoted to it. And I know she doesn't make things up."

In a series of letters to county executive James P. Gleason and the county council in June and July, Jacocks said, among other things, that crime had sharply increased in the county between 1977 and 1978 as the number of patrol officers was decreased; that policemen were having difficulty receiving back-up help on numerous calls; and that much of the county's radio equipment was faulty. She also charged that diGrazia and special assistant Philip Marks had unnecessarily spent more than $500 on business lunches and that diGrazia had failed to report $4,000 he had received from a county grant outside of his salary.

The Code 3 allegations were answered in a report issued by the department on July 12. The county auditing office said that was sufficient. But Andrew Mansinne Jr., director of the county council's office of legislative oversight, asked for more information.

"The allegations made by Code 3 were much too broad to be determined as valid or invalid without more investigation," Mansinne said yesterday. "But I did not think the police report adequately answered the questions they raised. These questions should be answered."

The police department has since mailed a letter to the council giving a more detailed response to the spending of the $4,000 - it was used, according to the letter, to pay expenses of Montgomery County officials who traveled to Boston to meet with diGrazia before he moved down here - and to the business lunch spending.

"There's one $4 lunch he can't account for and that's it," one diGrazia supporter said yesterday.

DiGrazia has been a subject of controversy for several months. Now Code 3 has also become a subject of controversy.

To date, Jacocks and Code 3 vice chairman Karen Helfert are the only two people who have been connected publicly with the group although supporters say there are others involved. One diGrazia supporter called Code 3, "two people masquerading as an organization."

According to Code 3's literature, the group was formed in March, 1976, after the shooting deaths of two county police officers to, "watchdog the Criminal Justice System, and to get some hard answers."

Among the questions Code 3 wants answered are: "How come criminals are running loose? What is going on? And, what about this tax gorged monolith: The Criminal Justice System. What do they do about it - if anything?"

Since the announcement of the grand jury's extension, Jacocks has refused to talk to reporters about any of her allegations or about Code 3.

Jacocks, the wife of a county police sergeant, was a meter maid working out of the Bethesda station from Dec. 3, 1960, unti she was dismissed on Dec. 30, 1960.

The firing came exactly one week after Jacocks, then Margaret P. Smith, had written a letter to the county manager protesting the extension of her probation period, according to court records of a suit filed by Jacocks against the county on Dec. 18, 1961.

Jacock's suit, alleging that she was summarily dismissed without written warning or a proper hearing, was turned down by the state court of appeals.

Jacocks' friends dismiss the almost 18-year-old incident as irrelevant. "Peggy knows a lot of people on the force, including a lot of old-timers," a longtime friend said yesterday, "and she's concerned about what's going on. She's not out to get diGrazia like his people claim."