Palestine Liberation Organization hard-liner Dr. George Habash forcefully urged rejection of President Reagan's Middle East peace plan today but also urged PLO unity and praised Yasser Arafat despite his less rigid position on the U.S. plan.

When the leader of the Popular Front for the Liberation of Palestine finished addressing the Palestine National Council, he was kissed and hugged by Arafat, the overall PLO chairman, who personally accompanied him back to his seat. Arafat could have been expected to be furious with Habash, the Marxist one-time rival who had just savaged the compromises and ambiguities that have been Arafat's stock in trade since the PLO's ouster from Beirut last summer.

Speaking with a skill and ardor that brought thunderous applause, Habash denounced "this shameful and disgraceful Reagan plan" which "says no to a Palestinian state and no to the PLO" and instead offers a possible association for the currently Israeli-occupied West Bank and Gaza Strip with Jordan.

"So, we'll say no to the Reagan plan and no to anything that does not serve our national cause," he said, pounding the table. Arafat, clad in uniform and checkered headdress, smiled weakly, then turned to an adviser and began chatting.

Habash, calling for a "clear and categorical rejection of all roads that lead directly or indirectly to the Reagan plan," said, "We did not pay the price of blood in Beirut to record an American diplomatic victory."

Arafat's loyalists insist that the point of avoiding the word "rejection" in the final conference language is to ensure that Israel--which has rejected the president's plan--gets the blame for its demise.

Meanwhile, Mattityahu Peled, a former Israeli general who met Arafat last month, said during a visit to Washington Thursday he "had the impression" the PLO would recognize Israel unilaterally if offered a role in the Middle East peace process, Reuter reported.

Habash was roundly applauded when he called for unity in PLO ranks and said "Arafat is our symbol." There was no need to add that Arafat at the end of the day would get his way--or most of what he wanted.