It's known in these parts as the Great Debate and it's dividing lifelong residents of this isolated mountain hamlet as nothing has ever divided them before. The issue: Whether 250 refugees from Laos currently living on welfare in San Francisco slums should be allowed to resettle on 873 acres of unoccupied farmland a California businessman owns here.

In an Appalachian town so insulated that the nearest stores and hospital are 20 miles away, the 150 farmers and mine workers are split just about evenly over the businessman's scheme and practically everybody here is fussing over it.

The county sheriff is saying that he fought in the Korean War to "keep people like that out of here," while the Baptist preacher is proclaiming that the refugees practice a heathen religion.

A farmer's wife who collected 83 signatures on a petition opposing the plan says the town simply can't handle, economically or culturally, a sudden influx of 250 Asians.

Meantime, Dawson's Methodist minister is so shocked by some of his neighbors' heated opposition that he is calling them "rednecks" and "hoggish."

The debate has left the businessman, Jerry Thompson, absolutely furious, the refugees uncertain about leaving San Francisco, and Dawson's natives unsure if this wink of a town will ever be the same.

"What we have here," says Dawson attorney John Robertson, "is an utter and total mess."

The dispute is over everything from biblical scripture to the local economy, but mainly it concerns what Robertson calls "fear of the unknown."

Two months ago Thompson, a 76 year-old San Francisco realtor, came up with a novel idea of how to use his farmland that has been unoccupied for several years. His solution was to lease most of it for an annual fee of $1 per acre to a tribe of 250 Laotian refugees known as the Iu Mien.

Thompson thought his idea was pretty good. For one thing he knew the tribal people, who formerly lived in the mountains of Laos, were exceptional farmers and could likely work wonders with his land. He also felt the refugees would certainly be, in his words, "a helluva lot happier tilling the soil than sitting on their behinds collecting food stamps."

The refugees were overjoyed with Thompson's overture. They tentatively accepted it and made plans to move east next spring. But what no one forsaw was the intense squabbling over the scheme that has since erupted among the snowy town's inhabitants, some of whom have been neighbors for as long as 80 years.

The debate has ranged from the madcap to the bizarre. First came the peculiar rumors. The Iu Mien would plant poppies and marijuana in the fields and make drug addicts of them all, was one rumor. There would be unavoidable racial intermarriage among the grandchildren, was another.

Baptist preacher Ray Cadle heard the Iu Mien practiced a religion known as Animism.

He looked that word up in Funk and Wagnall's and proclaimed to everyone who would listen in Dawson and nearby Smoot that the refugees "believe they are like animals and have no souls."

"That," he said, "I cannot countenance."

Then Dawson's Methodist Minister, Roy Gwynn, took to the pulpit and called the plan's opponents "bigots" and urged them to accept the Iu Mien as their brothers.

Meanwhile, a farmer's wife named Nina Smith suddenly became a civic activist.

Smith, who moved here 15 years ago from Rainelle 20 miles north when that town, with a population of 650 grew too big for her, was unable to accept the prospect of 250 new inhabitants in Dawson. She hopped into her Dodge Colt and rumbled dozens of miles through snow and ice to collect signatures on a petition opposing the refugees' resettlement. Copies of the petition were then forwarded to the stunned Thompson and the Iu Mien in California. She did so, she said, "to get Thompson's attention."

Finally, in a raucous town meeting two weeks ago at the Dawson volunteer firehouse that nearly ended in fisticuffs between Thompson's brother, 75 year-old John, and several plan opponents who ridiculed the scheme, Greenbrier County Sheriff Albert Lindsey stood up and declared that he and his brothers had fought in Korea to keep people like the Iu Mien out of Dawson.

He went on to charge that the plan, if enacted, would provide Thompson with "slave labor." According to the local daily newspaper, the Meadow River Post, Lindsey's remarks resulted in a round of applause.

Jerry Thompson, who was present at the firehouse meeting to provide details of his plan, ended up irate. "Nina Smith is a loudmouth and the sheriff is full of you know what," he snarled from his San Francisco office this week.

"I only want to give these poor people a break. They're fine farmers who are just wasting away in the ghetto here. I want to see them clear the land, build their own homes, grow their own food and earn their keep."

Robertson, the attorney, counters, "Look, most of us are of Scotch-Irish descent. We consider a neighbor the guy who lives on the next hill a mile away. There are only 400 Orientals in all of West Virginia. What sort of assimilation can we expect from these people? I think it's unfair to us and them."

The story of the Dawson debate might better be traced to 1971. For more than a decade West Virginia native Thompson has been trying with little success to figure out what to do with his woods and farmland that extend beyond hills and shrub-covered knolls off a one-lane dirt road.

The land belonged to his parents. He and his 14 brothers and sisters were born here in a two-story, wood-frame home that Thompson has preserved and added to. Thompson has not lived in West Virginia since 1928.

Between the 1940s and 1971 the land was farmed by John Thompson, the only member of the family who stayed in Dawson.

Unable to farm any longer because of his advancing age, John Thompson sold the land that year to his brother.

"Jerry basically wanted to save it, for the memories if nothing else," said John Thompson, a spry and jovial gray-haired man, as he sat before a coal burning stove in his living room. "For a while he leased it to some religious cult. Called themselves the Holy Order of Mans. Said they came from California. They farmed with their hands, and did things the old-fashioned way. Then they left and a young couple came and took it over. Then they left and it's been vacant ever since."

In 1975 Jerry Thompson formed a nonprofit family foundation to administer the land as a wildlife preservation. He imported a herd of buffalo and llamas to go along with the wild foxes, minks and occasional black bear that wander the wilderness and he hoped the refuge would attract visiters.

According to his brother, however, that didn't pan out too well, either. "The llamas are still there and the buffaloes are running all over everybody else's property," he said, "but I'm not sure that's exactly what Jerry had in mind."

Earlier this year Thompson read a story in the San Francisco Examiner about a tribe of Laotian mountain people who were miraculously growing vegetables in the city beneath freeway bridges and overpasses and who were then looking for other vacant lots in town to grow crops.

It was, he said, "the most amazing thing I'd ever seen. These were good old, hard working, industrious mountain folks doing farming in the city. I knew they'd be perfect for West Virginia."

Approximately 7,000 Iu Mien have resettled in the United States since 1979, most of them living in major cities on the West Coast. The Iu Mien orginally migrated from southern China at the turn of this century to the mountains of Laos.

"Among the 20 or so mountain tribes of Laos the Iu Mien were considered the upper-class and among the wealthiest," said Jonathan Habarad, a University of California anthropology graduate student who has studied and worked with the Iu Mien in the Bay Area. "They were entirely self-supporting."

During the war in Indochina the Iu Mien supported the royalist government of Laos and fought alongside the Americans. After the Communist takeover many of them escaped to refugee camps in north Thailand where they remained for five years until the United States allowed them to enter the country as refugees.

Their life here is not easy or happy, according to Kouie Choy Saechao, a Iu Mien who lives in San Francisco and works for Alameda County Social Services. "It's especially hard for those of us who remember how it was when we had our own land. We came from the mountains and ended up in a city on the other side of the world," he said. "Very few of us are working. We are very poor. It's hard enough just to learn this language. We get welfare and food stamps, but that is not the kind of people we are.

"Our deepest wish has always been to be able to return to farming."

Thus, when Jerry Thompson approached them with his idea the Iu Mien were ecstatic.

In September seven Iu Mien took a Greyhound bus trip from San Francisco to Dawson, where they were met by Thompson and shown the land. Habarad, who accompanied the Iu Mien on their journey, said he became optimistic about the idea after talking with 30 or so townspeople and Greenbrier County officials. "At the time there were very few opposed," he recalled. "Everyone seemed very open to the idea, within limits."

Merlene Thompson, John's wife, met the Iu Mien during their visit. "To tell you the truth," she said, "I thought they were the nicest folks in the world."

On Sept. 30 the Iu Mien returned to San Francisco. To their people they spoke glowingly of what they found in Dawson, how the fields were rich enough to grow wheat, barley, rye and vegetables and perhaps even rice.

Before leaving, Habarad left a three-page letter with the editor of a local newspaper that spelled out, in some detail, the history of the Iu Mien and their plans to build their own homes and harvest their own food in Dawson.

"Jerry Thompson views this effort. As an important first step toward the establishment of a national resettlement policy that allows the refugees to live and work productively at far less cost to taxpayers," Habarad wrote in the letter, which was published the day after he left. "The Mien are committed to farming for self-sufficience and to accept no public assistance. They are willing to live as their people have for hundreds of years, without the expensive luxuries of electricity, gas and telephones."

It was then that Dawson's debate began.

In hilltop and valley homes here it has been an ongoing dispute. Fonzie Fitzwater, an unemployed miner, said the controversy has become so nervewracking that he just doesn't talk about it to his friends anymore. "I'll talk about anything but that because I just don't want to fight," he said.

Preacher Cadle, a stocky brown-haired man with a mustache as thin as the stroke of an eyelash pencil, says the possible coming of the Iu Mien represents a threat to what he calls "Christian values."

He said he couldn't visualize himself living with a group of people who think they have no soul and absolutely refuse to believe in Jesus Christ. Would he feel the same if the Iu Mien were Jews, someone asked. "Yes," Cadle replied.

(Kouei Choy Saechao confirmed that the Iu Mien are Animists, but insists that their beliefs are the exact opposite of those described by Cadle. "We believe every living thing including man has a soul," he said. He also said he was confused by an anonymous letter he received from Dawson that expressed fear of possible racial intermarriage among the natives and the Iu Mien. "It is considered very innappriate for our people to marry outside, too," he said.)

Robertson's view that the controversy stems from "fear of the unknown" is "just a cop-out," according to Mr. Gwynn.

"With communications the way they are these days, we know about everyone from the Russians to blacks to Germans to Poles," he said, before heading out of his house to deliver a batch of Christmas cards to a local hospital. "Talking about fear of the unknown is just another excuse for bigotry."

The opponents insist, however, that they disapprove of Thompson's plan mainly because of the effect it would have on their lifestyle and local economy. Greenbrier County suffers an unemployment rate of 9.2 percent. West Virginia's unemployment rate is 12.7 percent, the highest in the country. One of every three miners here are unemployed and many people feel Dawson and Greenbrier County schools and other services can't handle the newcomers.

"We've got to try to take care of our own people first," Sheriff Lindsey said. Added Robertson, "Three, four families -- that would be fine. And if they come, I tell you, me and my wife would the first to welcome them with a bowl of bean soup. But 250? That's just too many for this part of the world."

This week the dispute entered a new, and less heated, stage when a private nonprofit San Francisco organization called the Foundation Task Force on Refugee Affairs commissioned a study to determine the feasibility of Thompson's idea. Next month two impartial consultants will visit Dawson and interview townspeople and Greenbrier County officials to gauge whether or not the Iu Mien can truly be welcomed.

They will also explore whether private and public funding is available to start the venture. The Iu Mien figure they need $60,000 for farm implements and supplies to launch the plan.

The Iu Mien and Jerry Thompson, meantime, have agreed to postpone any action on the resettlement until they have received and studied the consultant's report.

That, Nina Smith said, is all she really wanted in the first place.