The crowd of 2,500 in the chill air outside the dance hall on Kedzie Avenue on this tenaciously Democratic southwest side was at a fever pitch. Almost everyone wore buttons saying, "Temporary Republican," "Italian for Epton," "Police for Epton" or "Irish for Epton."

"Ber-nieee, Ber-nieee, Ber-nieee," they chanted as the candidate and his British-born wife emerged from their Cadillac. Bodies crushed around the car; hands reached out to touch Bernard E. Epton, the Republican who is running for mayor against Rep. Harold Washington (Ill.), the black Democratic nominee. Epton has become the Great White Hope for thousands of Democrats in this city's bizarre mayoral race. It is a most unlikely role.

He is a liberal Republican, a thin reed of a man, bald with a scraggly white beard whose past suggests anything but racism.

When Dr. Martin Luther King Jr. was assassinated in Memphis in 1968, Epton was so upset he took his young son and immediately went to Memphis and marched in a memorial demonstration for the civil rights leader. His son, Jeff Epton, now 35, is a Socialist candidate for the Ann Arbor, Mich., City Council.

He said he isn't sure he would vote for his father because of his sympathy for the "people that Washington represents, who . . . have been out of the mainstream."

"Bernie is no racist," said one liberal Democrat who served in the state legislature with Epton. "He was a good liberal on race issues. There's not a bit of bias in his system."

Yet Epton has touched a deep and resounding chord in this city, which has not elected a Republican mayor since 1927. And with only two weeks remaining in the race, Epton is rapidly closing on Washington, the first black ever to win a Democratic mayoral nomination here.

Support for both candidates falls along racial lines. Washington has a solid lock on the 40 percent of Chicago voters who are black; Epton's support is almost all white.

But, in the view of the crowd outside the Custom Chateau dance hall, Epton's appeal is not racial. The issue, they say, is Washington's record, such Washington supporters as the Rev. Jesse Jackson and the very nature of this city.

"We have a total disregard for Washington, not because of his color, but because of his record and the people he associates with," said Tony Barry, an off-duty police sergeant. "He doesn't represent other ethnic groups, just his own."

Barry and other white Democrats here complain they are being judged by a double standard.

"If you're white and you vote for Epton, you're a racist," the policeman said. "If you're black and vote for Washington, they say you are exercising black pride. That's a lot of bull to me."

Chicago has never been a melting pot. It is a city of diverse ethnic neighborhoods, separated in checkerboard fashion by expressways, railroad tracks, industrial belts and informal boundary lines.

Epton, 61, grew up in the Hyde Park neighborhood on the South Side and represented the area for 14 years in the legislature. He has reached accommodations with policemen, firemen and many neighborhood Democratic leaders, all of whom are leery of Washington's calls for reforms in the police department and an end to political patronage.

"When I am mayor, your neighborhood will be even stronger and better than it is now," Epton told the packed dance hall crowd here the other night. Later he added reassuringly, "I think one day the Lord will forgive you for voting Republican once."

There are, of course, signs of racism in the campaign over which Epton says he has no control. Some of his supporters wear buttons that are all white with no lettering; others wear white "Democrats for Epton" rain slickers or buttons with obscene remarks about Washington on them.

One popular button shows a Mickey Mouse figure saying "Hey Washington" as he makes an obscene gesture with his left hand. A T-shirt seen in one neighborhood said, "Vote Right. Vote White."

And Washington has charged that the tag line on Epton's commercials--"Before it's too late"--is a racial slur.

Here again is some irony. The commercials were produced by the Washington-based firm of Bailey-Deardourff which in the past has made ads for former senator Edward Brooke (R-Mass.), a black, and Sterling Tucker and John Ray, black mayoral candidates in the nation's capital.

At almost every stop, Epton defends the ads, however.

"Harold Washington's color isn't the issue," he says. "His integrity is the issue."

Washington has been convicted on an income tax charge, suspended from the practice of law for failing to represent clients, and sued on a number of occasions for failing to pay utility bills.

These incidents carry a powerful message in the working-class neighborhoods off Kedzie Avenue.

"I don't have anything against colored people," said Karen Dugger, 21, who grew up in a family of immigrants. "But we pay our bills and income taxes. Why can't he?"

Most voters know surprisingly little about Epton, who was virtually unknown until Washington upset Mayor Jane M. Byrne and Cook County State's Attorney Richard M. Daley in the Democratic primary.

"Thirty days ago he could have walked down the center of any street in town and not be recognized," media adviser John Deardourff said today.

Epton is a witty and urbane attorney, who made a small fortune in the insurance and electronics businesses.

"I'm old, tired and bald-headed," he once joked. "I'm the happy alternative."

As a pilot in World War II Epton won the Distinguished Flying Cross twice. The senior partner in a large downtown law firm, Epton has been a major contributor to GOP candidates and in 1960 tried unsuccessfully to buy the Chicago White Sox.

Elected to the State House in 1968, Epton was never a power in Springfield. During his first year in office the Independent Voters of Illinois ranked him the fourth most liberal member of the House, but his voting record became more conservative over the years.

In seven legislative campaigns, Epton had opponents only three times and was largely unprepared for the pressures of a citywide campaign in the highly competitive Chicago media market.

"This has all the intensity of a major presidential campaign," said Deardourff. "Everywhere he goes he is followed by four television cameras. The pressure is immense."

It has worn badly on Epton. When a television reporter tried to ask him about psychiatric tests he had in 1975, Epton shot back, "I only answer questions from responsible people. You're an embarrassment to your camera crew."