A strange thing happened to former congressman Donald Fraser, long a darling of the nation's liberals, when he returned to his hometown to run for mayor. He found himself cast as a carpetbagging friend of big business.

Fraser, facing what may be his last chance for a political comeback after an unsuccessful Senate bid last year, reacted badly.

At one point he complained that his image as a protector of "people who have had a hard time" had been viciously tarnished. At another, he defended the city tax assessor and his assessments of downtown business property.

His chief opponent in tomorrow's Democrat-Farmer-Labor Party primary, state Rep. James I. Rice, could hardly contain his glee. Fraser had fallen for his trap, he said yesterday. He's really the only politician in the history of the western world to defend a tax assessor.

"He came out looking not only as the chief apologist for the downtown business interests, but also for the city administration" Rice said. "He's great to campaign against. Everytime I put a lure on top of the water he jumps for it."

A few months ago, Rice, a longtime power in DFL circles, was given little or no chance of upsetting Fraser, who represented this city for 16 years in Congress.

But Rice has used populist attacks on downtown business interests to force a coalition of labor unions, policemen, antiabortionists and conservative homeowners that has Fraser supporters worried.

Most observers think Fraser, 55, will survive the primary. But many DFL regulars fear that even a close call may spell trouble for Fraser in the November general election, when his major opponent will be former mayor Charles Stenvig, a tough-talking city detective who is running as an Independent and doesn't appear on tomorrow's ballot.

Michael Barros, a young and articulate political unknown, is favored to win the Independent-Republican Party primary, and could pose a wildcard threat if he's able to attract financial support.

"I think if the election were held tomorrow, Stenvig would win," city council chairman Louis DeMarrs says without qualification. "The race is there for Fraser to win. The big issue is: Does Don Fraser really want to be mayor?"

DeMarrs and other party regulars have more than a passing interest in the race. The DFL Party, which supplied the nation two vice presidents (Hubert Humphrey and Walter Mondale) in the last 15 years, is on the skids.

It has yet to recover from the 1978 election, when it lost two Senate seats, the governorship and 32 seats in the state legislature to the Independent-Republicans. A Fraser defeat would be more than a setback. It would be a humiliation.

Fraser, who helped Humphrey form the DFL in 1946, accumulated one of the most liberal voting records in Congress and once served as president of the Americans for Democratic Action. But when he tried to move up to the Senate last year after Humphrey's death, he was defeated in the party's primary by businessman Robert Short.

He hadn't expected to run for mayor, and didn't even move back to Minneapolis when his congressional term ended. But when Mayor Al Hofstede announced, the day before the party's convention, that he wouldn't seek another term, Fraser caught a late-night flight out of Washington and captured the DFL endorsement.

Questions immediately arose: Did Fraser really want to be mayor? Was he looking for a stepping stone from which to mount another Senate race? Had he lost touch with Minneapolis? Did he know anything about the city? Why wouldn't Fraser's wife, Arvonne, quit her job at the Agency for International Development and campaign?

"Surely a man who showed more concern over the problems of foreign countries then his own district (in Congress) cannot now claim he has suddenly found a genuine interest in streets, storm sewers, garbage collection, local property taxes and law enforcement," said Stenvig.

Since last spring, Fraser has immersed himself in local issues and has fashioned a campaign around the issues of police reform, equalizing city and suburban property taxes, promoting downtown development and supporting neighborhoods.

His well-financed campaign has been aided by donations from some of the city's wealthiest business leaders, the endorsement of the Minneapolis Star newspaper and almost all of the city's DFL officeholders. Then, too, the city has fared well under DFL mayors in the past and its downtown is booming.

Normally, this combination would be enough for a popular former congressman to crush any opponent, but this is a very unusual election year here, one that has strained the credibility of the old DFL coalition.

The contrast between Rice and Fraser could hardly be greater. Fraser is a low-key, almost shy, intellectual. He grew up in a neighborhood around the University of Minnesota where his father was dean of the Law School.

Although he has spent a lifetime in politics, Fraser is a surprisingly poor campaigner. On the stump, Twin Cities Magazine said in a cover story, he looks more like "the grim reaper than the happy warrior" of the party. The story's headline also was telling: "The Second Coming (Yawn) of Don (Yawn) Fraser."

While Fraser's reputation is one of unquestioned integrity, Rice's reputation is one of a political wheeler-dealer who has come under grand jury investigation. His statements about downtown assessments and his business dealings have been repeatedly called into question by the Minneapolis Star and Tribune.

Fraser has accused Rice of dirty campaign tactics, and of "trying to start a class war in the city."

"We really have one of the most progressive business communities in the nation" he said. "It's my view that one should work with them because they are crucial to the future of the city."