IN SUNDAY'S magazine section of this newspaper, Walter Shapiro described the process by which a self-evidently great idea was first ignored by an agency, then embraced, and now has been placed on a remote back burner. It is an example of how the deregulators' vision of less government can translate into worse government.

Twelve days before leaving office, President Carter's appointees proposed a regulation requiring an eye-level, center-mounted brake light in new cars. Studies seem to demonstrate that this Cyclops of the freeways would be an eye-catching way to halve the number of rear-end collisions in city traffic. Officials in DOT's National Highway Transportation Safety Administration estimated the potential savings in reduced car repair bills alone at, conservatively, $1.29 billion a year -- to say nothing of the personal injuries that would be deterred or reduced in seriousness. The auto makers say the cost per car would be under $20.

But at the changing of the regulatory guard, the new Reagan leadership installed a glaring brake light of its own. The inevitable option paper is languishing in NHTSA. The proposal is strongly supported by the insurance industry, which gets stuck with repair bills and whiplash claims. It is unanimously criticized by the world's auto makers on grounds of aesthetics, cost, design, the nature of NHTSA's studies and so on.

These objections are far from overwhelming. Take the cost argument. Some might forgive the auto companies for caring first about sales and profits, but NHTSA should use broader criteria. On the other hand, it's reasonable to expect a maximum of design flexibility so that more testing and experience can lead to a better brake light. For now, even a regulation requiring that new cars make the extra light available as an option would be better than waiting five years for an ideal solution, which does not exist.