Picking his way delicately through the sloping band of viscous mud that is this drab village's main street, Brig. Gen. Rene Mendoza waved and smiled at the Indians who watched his progress as if he were a politician on the stump instead of the country's minister of defense.

Mendoza had come to town to show two journalists the efficacy of his Army's no-nonsense pacification campaign in the region.

"Only a few months ago the guerrillas controlled this place and these Ixil Indians supported and harbored them," the general told a foreigner who had accompanied him here to the heart of rebellious Quiche Province. "Today these Indians are with the government, and they are even helping us track down their former guerrilla friends in the hills."

Mendoza walked with a platoon of battle-dressed paratroopers deployed in front and in back of him, and each of the soldiers carried an automatic rifle. No one disputed his claims that the Indians welcomed the Army that had brought them peace and security after years of terror and fear.

The government is presenting San Juan Cotzal as a showcase of the sort of pacification effort it hopes will defeat the increasingly hot guerrilla war in the Guatemalan countryside, which threatens to turn this strategic Ohio-sized nation into a second El Salvador.

Cotzal, as the village is commonly known, was a bastion of the Guerrilla Army of the Poor, which, since its appearance in 1975, sought, with increasing success, to gain the allegiance and support of the nation's traditionally apolitical Indians, who make up more than 50 percent of the country's 7.2 million population.

It was also here in Cotzal that after a guerrilla attack on the military garrison in 1980, the Army reportedly turned on the town's civilian population with the sort of cold-blooded brutality that has given Guatemala a reputation for massive human rights abuses. Following the raid, the Army reportedly rounded up 60 of the village's young men and systematically killed them.

The Army's current pacification of Cotzal stems from another attack on the garrison Jan. 19 that left 12 government soldiers dead and seven wounded. That attack prompted a massive search-and-destroy operation throughout this rugged, mountainous province that has tied down more than half of the country's 30,000-member Army.

With a company of paratroopers now established in a mountain base carved out of the tangled wet forests just above the town, Cotzal's 3,000 docile Ixil residents are presented as proof of their conversion to the side of the government.

The allegiance of the hearts and minds of Guatemala's Indian majority has become the major battleground for the guerrillas and the Army.

Accompanied through the muddy streets by his tough chief of staff, Gen. Benedicto Lucas Garcia, the brother of the Guatemalan president and the architect of the Army's campaign to win the support of the Ixil, Mendoza is greeted with shy and deferential salutations by the Indians.

At the towering, faded white-washed village church, which has been without a priest for two years because of the violence, the defense minister's party is greeted by a white banner sagging limply across the street proclaiming: "Cursed guerrillas and assassins, out of Cotzal."

A dozen straw-hatted Indians with new 12-gauge shotguns are called to stand at attention around the church steps, a contingent, the defense minister is told, of a 120-man militia set up to help with village security and to aid the Army patrol against guerrilla infiltrations.

Like countless thousands of other impoverished villages in the undulating volcanic Guatemalan countryside, Cotzal has neither paved roads, running water, electricity nor medical care. It does have a primary school lodged in two ramshackle buildings where three teachers are busy with about 360 children learning to speak Spanish, a tongue spoken by only a minority of the Ixil. The Indians here, like other Guatemalan tribes, descended from the ancient Mayans and doggedly have preserved their traditional culture and language.

The school, which will move to a new, concrete building being constructed on the outskirts of town, is described by Mendoza as the sort of social action the government is taking to make up for centuries of neglect of the Indians.

"We know we have a lot of problems, and need social reforms," the defense minister admits. "But if we can end the guerrilla threat, we can change this country from day to night."

Yet it is security, more than any social action, that remains the ultimate concern of the pacifiers. "We must pacify the village before we can develop," says Gen. Lucas, who is in battle dress with an automatic pistol strapped to his belt on one side and two giant hunting knives in scabards on the other.

While Mendoza describes how the Indians are content with the security the Army has brought them, Lucas says it is only the Army's show of superior force here that has cowed them.

Peasants "in the country are timid and fearful by nature," Lucas says. "They side with whoever is the strongest. Before we moved in here in force, they went with the guerrillas and now that we are here they are with us."

Ignored in the official euphoria about the pacification of Cotzal and other key villages is the counterproductiveness of the ruthless tactics that the Army has used.

The war being waged by the Guerrilla Army of the Poor and three other leftist groups around the country has threatened to turn Guatemala into another El Salvador, which has been attributed to a string of alleged Army massacres of Indian villagers that have begun to politicize the previously apathetic Indians. One of those massacres reportedly occurred here in 1980.

Since the 1960s guerrillas have been waging war against the right-wing coalition of generals and business oligarchs that has ruled the country. So long as the guerrillas remained just an alienated group of radicals drawn from urban areas, they were more nuisance than threat.

But when the Guerrilla Army of the Poor was formed and began working in Quiche Province to convince the Indians of the injustice of their long neglect and exploitation as a cheap labor force for the country's coffee and cotton plantation owners, the old guerrilla equation suddenly was altered.

The selection of Gen. Romeo Lucas Garcia as president in 1978, which was followed closely by the Sandinista revolution in Nicaragua and the growing war in neighboring El Salvador, brought a dangerous turning point to the long simmering guerrilla war. Determined that what happened in Nicaragua and is happening in El Salvador would never be allowed to happen here, the new president declared war not only against the guerrillas and civilian villages around which they operated but also, according to international critics of the government, against all citizens who were suspected of harboring liberal views.

As the death toll of reprisals in the countryside and assassinations and kidnapings in the cities has grown to what Roman Catholic Church authorities here estimate was a toll of 11,000 last year alone, a polarization has occurred that threatens today to result in the very upheaval that President Lucas Garcia was so determined to prevent.

U.S. intelligence estimates that Indians make up as much as one-half of the guerrilla ranks and almost two-thirds of the monthly death toll of more than 500.

By flooding Quiche Province with half of the country's hard-pressed Army and launching a series of operations to try to clear out guerrilla bases in the rugged mountains and ravines, the Army has gained the upper hand in places like Cotzal.

But as Gen. Benedicto Lucas Garcia so readily acknowledges, the loyalty, or at least the neutrality, of the Indians is dependent on the government's ability to maintain a superior force in the region. But with other guerrilla actions taking place in virtually all of the country's provinces, this may prove impossible.

Waiting for the helicopter with its two .30-caliber machine guns on each side to fly out of Cotzal, Lucas ventures that to succeed against the guerrilla war the country is facing, he needs a minimum of 100,000 soldiers.