Rep. H. Joel Deckard (R-Ind.) has a common problem: he needs money to fight a strong Democratic challenger. So Deckard recently swallowed some of his conservationist image and did what many other Republicans in a pinch are doing these days. He invited Interior Secretary James G. Watt to host a fund-raiser for him.

Watt's appearance at a $500-a-plate luncheon in downtown Evansville, Ind., last Monday brought a quick fix of $20,000 to Deckard's campaign kitty--much of it from wealthy mining and oil industry executives who warm to Watt's pro-development policies, according to a Deckard aide.

But it may also have brought Deckard some trouble. "This could be like shooting himself in the foot," said Marion Edey, director of the League of Conservation Voters. The league, considered the nation's most potent environmentalist political action committee, may now decide not to support Deckard for reelection, Edey said.

What happened to Deckard reflects the mixed political blessing that Watt has brought to the Republicans. Thanks to his controversial policies and sharp tongue, he is, according to national Democratic pollsters, "the most hated man in America." Yet he remains the most sought-after GOP fund-raiser except for President Reagan and Vice President Bush. Watt returned Saturday from a two-week, cross-country swing in which, Republican sources estimate, he raised more than $750,000 for GOP groups and incumbents--leaving record crowds and protesting conservationists in his wake.

"Watt is a magnet. And like all magnets, he repels as well as attracts," said Douglas Baldwin, the secretary's trusted spokesman and longtime friend.

That magnet will be used selectively, but extensively, by the GOP and the White House in the hinterlands throughout this election year--most often in the West. Watt is now scheduled to spend almost half of the rest of 1982 outside of Washington stumping for GOP incumbents, in between official business trips, Baldwin said.

One reason for Watt's heavy campaign schedule, despite his high negative ratings, is a shortage of politicians in the Reagan Cabinet. Other than Secretary of State Alexander M. Haig Jr. and Defense Secretary Caspar W. Weinberger, whose duties keep them close to Washington, Watt and Transportation Secretary Drew Lewis are virtually alone as stump speakers. And Watt prides himself as "the most devout Reaganite" in the Cabinet, aides said.

Another is that he delivers--a factor that even some moderate Republicans feel they cannot ignore. As Deckard's campaign treasurer, Charles Givens, explained: "When you're trying to raise $350,000 against a three-term incumbent mayor Bloomington's Frank McCloskey , when after redistricting you wind up representing a district with 20 percent new voters, and you have to get your message out, you do what you can to raise money, short of anything illegal or immoral."

Watt dismisses criticism that his heavy political schedule interferes with his official duties, for which he is paid $69,630 a year. "The political hat is one of many hats that Watt validly wears as a presidential appointee and a Cabinet officer," Baldwin said.

In his last two weeks on the road, Watt has most often worn a 10-gallon cowboy hat, styling himself as a westerner taking on the Eastern Establishment. "We are fighting those who have had privileged access to positions of power," he told one group.

He portrays his policies as part of "the Reagan revolution" against liberals and Democrats, citing his drives to open public lands to mineral, oil and gas exploration, to relax strip-mining regulations, to lease vast portions of the outer continental shelf for energy development. He apparently has refrained from statements as vituperative as some he made in the past--such as drawing distinctions between liberals and Americans.

For Republican incumbents and clubs, the immediate effect of the Watt visits is capacity crowds and big bucks. The Minnehaha County, S.D., Republican Club drew a record 700 paying guests to last Tuesday's Lincoln Day dinner, at which Watt received two standing ovations. The group grossed $20,000 at the door. Earlier in the day, Watt helped Republican Rep. Clint Roberts raise $25,000 at a $250-a-plate dinner at the local Howard Johnson's. In Stark County, Ohio, the local Republican club drew 1,200 to its McKinley Day dinner, compared to the usual showing of 700 or 800, said Rep. Ralph Regula of Canton.

The secretary also swung through California on behalf of FreePAC, a conservative political action committee; to Texas for a private party with big Republican contributors; to Colorado for Rep. Hank Brown, and to Salt Lake City for Rep. James V. Hansen.

The Republican group or incumbent pays for the political portion of Watt's trip in each case, according to the Republican National Committee.

But Democrats contend that Watt's support for candidates will backfire in the long run. Peter D. Hart, a national Democratic pollster, calls Watt "the Kryptonite around the Republicans' neck."

"Consistently, wherever we put him onto a survey," Hart said, "he'll come up at the absolute bottom or next to the bottom of all the public personalities that we test. The ability to raise funds and to appeal to the electorate are two different things."

The mixed signals of a Watt endorsement were evident on the Ohio leg of his trip. He was cheered wildly by Stark County Republicans at a Canton fund-raiser, and used a press conference afterward to attack Akron Democrat John F. Seiberling, a longtime conservationist and stern Watt foe. The attack received front-page coverage in The Akron Beacon-Journal, prompting Seiberling's staff to call him in distress.

Seiberling contends he was delighted: "I have a fund-raiser next week and the timing couldn't be more perfect. The only thing better would be if he bought a ticket to the fund-raiser for me!"

And when the Vermont state Republican Party invited Watt to speak at a fund-raiser scheduled later this month, it drove a wedge in the party, which takes progressive stands on environmental issues. Several Republican state legislators announced plans to boycott the event. Gov. Richard A. Snelling and Sen. Robert T. Stafford, both Republicans, will also be absent--largely because of scheduling conflicts, according to their staffs.

But all the furor has helped ticket sales, said state party Chairman George Coy, who predicts a sellout. "Now I don't have to go out and tell people he's coming," Coy said.

To minimize such divisiveness, most of Watt's trips are made on behalf of Republicans who apparently feel comfortable wearing the administration mantle Watt brings with him--for example, Rep. Albert Lee Smith of Birmingham, Ala., who raised $25,000 with Watt's help at a hastily assembled affair in February.

"People in our district are very pro-Reagan from the standpoint of not having the Russkies hold us hostage," said Smith's campaign manager, R. T. Gregg. "In Birmingham, we like our freedom, so he hits a good note."

Of the five congressmen for whom Watt campaigned this month, only Deckard had a voting record of more than 50 percent for environmental issues, according to the League of Conservation Voters, and three ranked below the House Republican average of 32.(Deckard rates 57 percent, according to the league.)

Watt was enthusiastic about his receptions the last two weeks, Baldwin said after talking to him late last week. Despite the acrimony in Deckard's district and elsewhere, Baldwin said, the trip convinced Watt that he has wide support "beyond the Potomac."

Besides, Baldwin added, "we consider it a wasted day if he doesn't draw a demonstration by some environmental group."

At least one leader of such groups--Russell Peterson of the National Audubon Society, a former Republican governor of Delaware--said he is pleased to see Watt spending so much time on the road.

"Normally, I'd be upset if someone paid to run a major department ran off campaigning for a political organization," Peterson said. "But in Watt's case, I think it's a good idea: get him off the job. He can do less harm raising money for Republicans than working in his office."