A long-standing legal battle over development of the Georgetown waterfront was apparently resolved yesterday when the D. C. Court of Appeals cleared the way for eventual transfromation of the once run-down industrial area into a minitown of expensive town houses, apartment and office buildings, hotels and shops.

The Citizens Association of Georgetown, joined by two other civic groups, had spent nearly four years in court and more than $50,000 vigorously contesting city zoning regulations that allowed developers to make drastic changes along the waterfront - changes the citizens complained would "Manhattanize Georgetown."

In a long opinion yesterday, however, Chief Judge Theodore R. Newman Jr., writing for the appeals court, upheld the city's authority to set those zoning regulations through the independent powers granted by Congress to the District of Columbia government with home rule.

In so long, the appeals court affirmed a decision last Novermber by D. C. Superior Court Judge Sylvia Bacon. Bacon's ruling encouraged some developers to move ahead with construction plans and work that had been held in abeyance while the citizen's lawsuit made its way through the court.

The appeals court's affirmation of the city's authority to make its own zoning decisions "removes a problem" that clouded the city's ongoing efforts to develop its own comprehensive land use plan, said Ben Gilbert, director of the D. C. Municipal Planning Office.

"Now that the court has said we're on the right track, it's a great help to us," Gilbert said.

The court decision makes way for plans to build boat houses and docks, a public bazaar and a dinner theater in addition to stylish new apartment and office complexes along the waterfront.

Property at Wisconsin Avenue and N Street, once the site of an old trolley repair barn, will be the location for 75 town house apartment. A 44 room, 18th century style inn is under construction south of the C & O Canal, to be joined by condominiums, offices and town houses.

In December, the first tenants will move into a group of $100,000 and up federal style town housess, constructed by Holland and Lyons Associates Inc. between Wisconsin Avenue and Potomac Street, K Street and the C and O Canal. The $20 million construction project includes renovation of a historic paper mill into luxury condominium apartments, according to John T. Conrad, vice president of Holland and Lyons Construction Inc.

The site of an old flour mill between Potomac Avenue and 33rd Streets NW will, by the spring of 1979, become a complex of offices, apartments and shops. The city itself is renovating the old Georgetown Market on M Street NW which will be leased for sale of fresh vegetables, wine and cheese.

The citizens associations argued that such massive developments in the waterfront area will bring with it pollution, traffic congestion, noise and overcrowding that will make the area unlivable. They favored, instead, mixed development along the waterfront, limited to small houses, shops and apartments that now fill the Georgetown area above M Street NW.

Although the fight was lost in court, Charles Poor, president of the Georgetown citizens association, said yesterday that his organization welcomes the resolution of the legal issues.

The appeals court decision "will get us out from the courts into active cooperation with the (city) government," Poor said in a telephone interview.

"The fact there was a decision pending impeded, a little bit, free discussion with the municipal planning office and other elements of the District government" over the waterfront disputes, Poor said.

As a last resort, the citizens could ask the U.S. Supreme Court to review the appeals court decision. However, Bruce J. Terris, an attorney who represented the citizens, said yesterday that, since the case centers on interpretation of local law, it would not normally be considered by the Supreme Court.

t"It is probably the end of the line for the litigation," Terris said. "What I don't think it's the end of the line for is the issues.

"The D. C. Court of Appeals enunciated what their view of the present law is and that law can be changed." Terris said, either by the City Council or the Congress.

The citizens' court case focused on a November 1974 decision by the city zoning commission and a set of land use objectives set down in 1968 by the National Capital Planning Commission.The zoning decision provided for mixed use, multi-density zoning - which permitted the plans now under way on the waterfront - while the Planning Commission's objectives called for low-density development.

In their lawsuit, the citizens argued that the 1973 Home Rule Act provides that zoning changes must be in accordance with the "comprehensive plan for the nation's capitol. Since the planning commission's objectives were the only such plan in existence, the zoning decision by the commission was inconsistent with the plan and thus should be prohibited, the citizens contended.

In his opinion for the appeals court, however, Chief Judge Newman concluded that it not the intent of Congress - in granting the District home rule - to give the planning commission control over zoning decisions while the city was developing its own comprehensive plan.

Once home rule was effective, the commission's only role was to prepare plans related to federal properties and to overrule any District plans that might adversely affect those federal interests, Newman said.

Newman also dismissed the citizen's contentions that undisclosed communications between developers and city planning officials during consideration of the zoning regulations violated their right to a foar hearing. While some of the actions may have been "impolitic," Newman said, they did not violate the citizens' rights.

Five appeals court judges joined Newman in his opinion.

In a partial dissent, Judge Frank Q. Nebeker agreed with the overall outcome of the case on the narrow grounds that the zoning commission with under no obligation to the planning commission plan. In a separate opinion, he said the developers had already spent "massive amounts of time energy and money" on their projects.

Judge Stanley S. Harris, also in a separate opinion, said he endorsed Nebeker's views and could not agree fully with the majority. Harris contended that, while Congress called for zoning consistent with a comprehensive plan, the majority now allows changes to be made when no such plan exists in the District. The court's majority ruling "sounds the death knell" for any concerted efforts to adopt a plan for the District, since the court has condoned zoning on an "ad hoc" basis, which Congress did not intend.

Judge George R. Gallagher did not participate in the decision.