After a seven-year battle that pitted hard-core preservationists against one of the city's leading developers, a bulldozer began knocking down historic Rhodes Tavern yesterday to the cheers, jeers and tears of a small crowd that gathered to watch the demolition of Washington's first town hall.

A bulldozer, wielding a steel girder in its jaws, tore into a rear corner of the 185-year-old brick and stucco structure at 1:57 p.m., just a few hours after the D.C. Court of Appeals lifted an injunction that had blocked the District government from issuing a demolition permit for the building at 15th and F streets NW.

Moments before the bulldozer went to work, Rhodes Tavern's most fervent supporters stood on the sidewalk in front of the building and hurled angry verbal attacks on representatives of developer Oliver T. Carr, who were standing across the street in front of the Hotel Washington.

"This is what you're losing. . . . You ought to be ashamed of yourselves," shouted Joseph N. Grano Jr., president of the Citizens Committee to Save Historic Rhodes Tavern, as he held aloft a drawing of what the building might have looked like if restored to its former condition.

Grano, who quit his job as a government attorney four years ago to wage a crusade for the tavern's preservation, charged across the street at one point to confront Carr's project manager, Art Hanket, calling him and other employes at the firm "20th century vandals."

Hanket, arms folded across his chest, stood there with a half-smile on his face, replying softly, "We're just abiding by the law. . . . Grano had his day in court."

"The law says you could tear it down, it doesn't say you have to," Grano retorted.

Despite some verbal confrontations, Grano and a few other members of the committee were subdued as workers began tearing down the building.

They watched sadly as the structure, downtown Washington's oldest commercial building, was dismantled bit by bit with each blow of the girder and tug of a cable attached to the bulldozer.

A wrecking crew, after quickly turning the three-story building's east wall and annex into a pile of bricks and boards, appeared to have halted work at 3:30 p.m. with most of the original building still intact.

At about the same time, Grano's group had rushed into court and posted a $100,000 bond in an effort to block further demolition while tavern supporters press other legal arguments against its destruction.

Demolition continued later in the evening, however, and by late last night, the roof and upper two floors of the entire structure had been ripped away, leaving only a portion of the original outer wall still standing. That is scheduled to be torn down this morning.

The court vacated its temporary demolition ban yesterday morning as Grano was at a bank making arrangements to post the bond, he said.

The court set the bond 10 days ago to cover Carr's estimated losses pending additional appeals.

But the current, and probably permanent, legal go-ahead to demolish Rhodes Tavern clears the way for Carr and the Equitable Life Assurance Society of the U.S. to proceed with Phase II of the long-stalled $100 million Metropolitan Square office and retail complex.

"We're very excited about being able to proceed," Robert O. Carr, the firm's executive vice president, said yesterday. He said construction delays and legal expenses have cost the firm "an awful lot" of money over the years, though he declined to put a dollar figure on the costs.

The Carr people, including those at the demolition site yesterday, were clearly delighted to be writing the last chapter -- what they believed to be the real last chapter -- in the Rhodes Tavern saga. They held a party yesterday afternoon in the firm's offices to celebrate.

Since late 1977, when Carr announced plans for what was then a $40 million project, the building has faced the wrecker's ball several times -- only to be rescued at the last minute by a series of legal and political maneuvers engineered by the citizens committee to save the tavern.

While some preservationists tried to have the tavern moved, Grano's committee, formed in April 1978, steadfastly fought to keep and restore it at its site. Committee members appealed to the developer to incorporate it in his plans for the complex. They appealed to various city officials, including Mayor Marion Barry. And, finally, they appealed to the people.

If yesterday's bulldozing was the low point for Grano and other preservationists, last November -- when D.C. voters overwhelmingly approved an initiative designed to save the tavern -- was their high point. While the measure was not binding, tavern supporters clearly hoped it would make the political and public relations fallout from razing the building too costly for Carr and Barry.

The initiative said it should be "public policy" for the city to save the tavern and called for the appointment of a special advisory board to figure out a way to preserve it. But while the mayor was naming the board members, Carr and city attorneys went to court to get permission to issue the demolition permit.

Last month, in a decision that surprised and infuriated the preservationists, D.C. Superior Court Judge John F. Doyle declared the initiative unconsititutional, setting the final countdown on the tavern's existence.

"I know people don't believe this," Grano said yesterday, "but I'm more hurt about what Judge Doyle did that I am about what happens to Rhodes Tavern."

Grano called the building "a symbol" of representative government in the city. Carr might be "trampling" on the symbol by tearing down the building, but the courts, he said, trampled on the right of the people to govern when it threw out the initiative.

Grano also had angry words for Barry, who he said had twice supported saving the tavern -- before his critical mayoral primary in 1978 and his reelection bid in 1982 -- only to change his mind after the elections. And he blasted The Washington Post, which has editorially endorsed efforts to have the building torn down.

The tavern's detractors have often called it "an eyesore" and the "ugliest" historic building in Washington. "The time has come to rip it down; it was ruined years and years ago," said Fred Pivarnik, an employe of the federal court's probation division who stopped to watch the demolition on his way to get a haircut. "But Mr. Grano is to be commended."

But others, remembering 1981 when the building was home to a newsstand, a fruit shop and the Blue Mirror Carryout, said they were sorry to see it go. All morning, they paraded by the building, taking last looks. One man in a business suit and carrying a briefcase paused briefly to touch a portion of the brick wall.

For Grano, the bulldozer yesterday represented a failure of the system to respect the will of the people and a failure of many people to see the building's potential.

"It tells a wonderful story . . . . Mount Vernon didn't look like it does now when it was a ruin. Independence Hall didn't look like it does today. It was a dog pound."

Yesterday's demolition work did not go off without a hitch. Aurelio Banting, 34, of Hyattsville, suffered chest and back injuries when he climbed into the "scoop" of the bulldozer to attach a cable and it started up, closing the shovel over him. He was listed in fair condition at George Washington University Hospital.

Officials of the Wrecking Corp. of America had initially estimated that he building was "soft" and could be demolished in a couple of hours. Work was stopped briefly after Banting was injured, but later resumed and continued until about 11 p.m.

By then, only the first-floor outer wall of the original building was left.

Terry Anderson, vice president of the wrecking company, said yesterday was the fourth time he had been "on call" to raze the building.

"I kind of feel like the executioner," said Anderson. He said tearing down old hotels often sparks the same "emotional impact" shown by the tavern supporters, "but I'm glad I'm not the judge and jury on this."