It was billed in advance as one of the hottest shows in Washington--"vintage Watt," one environmental group promised--and, as with all good political theater, the backstage preparations went on for weeks.

The Sierra Club called newspapers and networks to ensure plenty of coverage. Other conservation groups shipped position papers to friendly House Democrats to ensure pointed questions. Still others supplied copies of the latest incendiary comments by their nemesis, Interior Secretary James G. Watt.

Meanwhile, at the Interior Department, Watt and his aides prepared with equal relish for yesterday's confrontation with the House public lands and national parks subcommittee, a generally anti-Watt preserve. "He's going into the jaws of the dragon," a Watt aide said with delight last week. "He loves it."

When told the hearing would be held in the regular committee meeting room, Watt gloated: "They'll never get all the cameras in there. We draw a crowd." (Later, the subcommittee did manage to secure a bigger room.)

The official subject of the hearing was the issue that appears to have mobilized the most opposition yet to the controversial secretary--his hotly debated policies governing mineral, oil and gas development on the nation's 80 million acres of wilderness lands.

But the bigger show was the ritual hunt between Watt and his conservationist foes, who battled yesterday over far more than the two wilderness bills on the agenda. The feuding included such moments as Watt's interruption of an attack by Rep. James Weaver (D-Ore.) with the retort: "I always love you, Congressman Weaver. You're tremendous." To which Weaver responded: "I don't love you, Mr. Watt."

As such, the 3 1/2-hour hearing provided the latest demonstration of the curious symbiosis that has grown up between friends and foes of James Gaius Watt--the man environmentalists love to hate, and who loves to be hated by them. Like predator and prey, the two sides have pursued each other for 14 months, so furiously that at times it is difficult to tell which was preying more on the other.

The intensity of the battle has done wonders for the news media attention accorded both sides. "This is incredible," said a subcommittee staffer as he looked out on the 150 listeners packed into the hearing room, the nine television cameras trained on Watt. "Cecil Andrus Watt's predecessor was small fish compared to this. We were lucky if we got one television camera for him."

The enmity has brought financial rewards to both sides as well. The more Watt is attacked by liberals, Democrats or conservationists, the more money he raises on the Republican circuit, according to the Republican National Committee. The RNC says Watt is in more demand for fund-raisers in the hinterlands than any other administration official, except President Reagan and Vice President Bush.

And the more the sharp-tongued Watt goes on the attack--he recently called environmentalists "a left-wing cult which seeks to bring down the type of government I believe in"--the more the memberships of conservation groups swell. The Sierra Club and the Wilderness Society now report record memberships, giving much of the credit to Watt-inspired fears. A recent Wilderness Society solicitation was mailed out in an envelope bearing a picture of Watt and the banner: "This man must be stopped!"

Recently, however, both sides have expressed fears that they have carried the battle too far. Some environmentalists and Democrats say they are worried about a "sympathy backlash" that may eventually make Watt even stronger. And some oil industry leaders and Republicans have said privately that Watt may have become such a lightning rod that he will hurt their causes, rather than help them.

The uproar over Watt's wilderness policies is the case most often cited by those who fear he has become too controversial.

At the outset, Watt advocated more aggressive development in the nation's primeval forests. But the proposals provoked surprisingly angry reaction across the country, even in Watt's normally friendly home turf of the Rocky Mountains, and he eventually retreated--at the urging of several Republican westerners in Congress.

Noting that the opposition is coming in part from the heart of Watt's constituency, conservation groups and Democrats have seized the wilderness issue as their best hope of prompting a general backlash against Watt.

Watt points to his proposed "Wilderness Protection Act," the subject of yesterday's hearing, as a sign of his willingness to compromise, since it would impose a mining and drilling ban in wilderness areas until the end of the century. The secretary told the subcommittee yesterday that he is willing to give even more ground.

But Watt's "compromise" was shouted down yesterday by Democrats, including Rep. John F. Seiberling of Ohio, Rep. Phillip Burton of California and Weaver, who variously called it a "disingenuous" and "fraudulent" scheme to destroy the wilderness under the guise of protecting it.

Through it all, Watt smiled at his attackers, shooting back with sarcasm whenever possible.

"I apologize for some of the stress you've been put through today," the soft-spoken Seiberling said at the end of the hearing. "I'm sure you know it's part of the legislative process."

Watt beamed and answered: "I love it."