The faithful gather along the roadside here in the early afternoon sunshine, hundreds of them dressed in the colors of the sunrise, from pale tangerine to deep purple. The tones of their chanting and musical instruments reverberate from the stark surrounding hills.

As Bhagwan Shree Rajneesh approaches in a two-toned, gold and silver Rolls-Royce along the winding mountain road, the crowd goes crazy, singing, dancing, leaping into the air. Some weep with joy.

On the surface, the commune here is a utopia for its 4,000 full-time residents and about 2,000 others who come for weeks or months at a time to study with Bhagwan. But the appearance is misleading.

Since the 52-year-old guru purchased the 64,000-acre Big Muddy Ranch in 1981 and moved his operation here from Poona, India, reaction from the local residents has been -- at best -- less than cordial. The Rajneeshees have faced a barrage of legal opposition, from a lawsuit filed in 1983 by Oregon Attorney General David Frohnmayer charging that the community violates the First Amendment requirement for separation of church and state to litigation by liberal environmentalists charging that it violates state land-use laws and should be torn down.

Ma Anand Sheela, chief spokesman for the Rajneeshees until Bhagwan ended a three-year silence last October, frequently has appeared before the news media carrying a loaded pistol, criticizing the intolerance of Bhagwan's enemies and warning that any attempt to do away with the commune would be met with bloodshed. Hostility to her has grown so strong that a rock record, entitled "Shut Up Sheela," became an instant hit late last year on Oregon radio stations.

At the base of the 15-mile dirt road winding through the mountains to Rajneeshpuram, local residents have erected a sign saying, "Jesus Christ Died to Save Sinners." Bumper stickers proclaim: "Better Dead Than Red." Threatening signs have been posted declaring, among other things, hunting season on the "Red vermin." Rajneeshees say death and bomb threats are phoned into the commune switchboard almost daily.

And the Rajneeshees have responded. Visitors going up the only road to the ranch are observed by guards at radio-equipped checkpoints, and a security force trains in the use of weapons, from pistols to Uzi submachine guns. Since a Rajneeshee-owned hotel in Portland was bombed in 1983, overnight visitors to the ranch are searched for drugs, weapons and explosives. And when Rajneesh takes his daily drive past his followers, he is accompanied by heavily armed guards.

The contrast between the Rajneeshees and the outside world is stark. Nearby residents have called the Rajneeshees "zombies" and "Satanists" who don't believe in Jesus, comparing them with the religious cult in Jonestown, Guyana, that ended in a mass suicide-murder of more than 900 cultists.

The Rajneeshees have called the locals "bigots" and referred to the area as the "redneck Riviera." Ma Prem Isabel, a spokesman for the commune, said, "It's like you've always been a member of the majority group, and suddenly your skin has changed color."

The physical contrast is also striking. While the surrounding communities, many of them virtual ghost towns, eke out a living, the followers of Rajneesh -- with an investment of $120 million from followers' donations -- have created an oasis where there was once an arid, abandoned, overgrazed ranch.

In less than four years, the Rajneeshees -- working 12 hours a day, seven days a week -- have paved roads, created a man-made lake, built housing. Nestled into the canyons, there are cafeterias; a disco with a bar and gambling tables; a modern 147-room hotel; a small shopping mall with boutiques, jewelry store, hair salon, pizzeria and bookstore; and a 4,000-foot runway for the Air Rajneesh fleet of DC3s. Followers make their way around the huge commune on a fleet of yellow school buses labeled Rajneesh Buddhafield Transport.

In addition, there is a vineyard, intensive farming projects, a sophisticated recycling project and major efforts to restore the streams and watershed in the area.

Swami Krishna Deva, the mayor of Rajneeshpuram and a former Los Angeles psychologist, says, "There was nothing here before . . . . What better neighbor could you have? There's no violence, no crime, no drugs. We're taking care of the land."

But local residents don't see it that way. They have been offended by the unknown religion, the rumors of free sex, and the ostentatious show of wealth as the guru tours the mountain canyons in his more than 80 Rolls-Royces, gifts from followers.

In 1982, the Rajneeshees, fearful that they might not gain municipal status for their ranch, bought up property in the town of Antelope, population 40, about 19 miles away. After incumbent officials called an election to dissolve the town to avoid a Rajneeshee takeover, the Bhagwan's followers voted in their own officials, eventually changing the town's name to Rajneesh and the general store into a cafe called Zorba the Buddha.

One of 13 previous residents who still live in the area said, "We've basically been driven from our homes. We've lost our way of life. It's a police state now . . . . We're under 24-hour-a-day surveillance. They drive around and watch us." That resident, who would not be quoted by name, said, "Everyone in town would sell now. But who in his right mind would buy our houses?"

A local deliveryman, who also asked to remain anonymous, complained that Bhagwan's security detail has forced him to pull off the road and wait while the guru drives by. "They want me to pull off and bow down to the Bhagwan. But there's no way," he said.

The Rajneeshees, on the other hand, believe the antagonism is based on a jealousy about their life style and happiness. They say their faith is based on no specific dogma or deity, but on meditation, emotional honesty, openness and spiritual growth that is taught by Bhagwan, along with the message that his followers should not take themselves too seriously.

The followers, who tend for the most part to be white, well-to-do Americans and Europeans, describe their faith as something that can be felt, but not easily explained. Bhagwan has attracted more than 500,000 followers from all over the world, according to spokesman Ma Prem Isabel. Religious festivals are held four times a year at the ranch, with the largest in July attracting about 15,000 faithful.

The faithful include an unusually high proportion of professionals, including doctors and lawyers, said Ma Prem Isabel. One psychiatrist explained that he had left a large practice to study with Bhagwan because, even after working with many of the leaders in his field, he was unable to answer many questions about the meaning of his life or the lives of his patients.

Some Rajneeshees turn over their wealth to Bhagwan, but it is not required, and several at the ranch drive their own Rolls-Royces, left over from previous lives.

Last year, the Rajneeshees imported several thousand street people to the commune in a move that local officials charged was an effort to bring in votes to take over the county government. The Rajneeshees ended up boycotting the election, and many of the street people have drifted away.

But fear of a Rajneeshee takeover in Oregon persists. There are four bills introduced in the state legislature this year, two that would end the city charters for Rajneesh and Rajneeshpuram, forcing Bhagwan's followers to dismantle their dream city. A state referendum last year to abolish the "alien cult" failed. Revenue-sharing funds for the city are being held in escrow while the lawsuits are pending, and the local police force has been banned from receiving information from law enforcement computers that might help them identify stolen cars or suspected criminals wanted in other communities.

Jane Treanor, who runs the Texaco station and general store in the town of Shaniko, population 20, about 25 miles from Rajneeshpuram, says she's been disturbed by the rumors that the Rajneeshees are arming themselves. "I think they're paranoid. We don't wear guns . . . . I think they'd like a confrontation Then they'd have a few martyrs."

But Krishna Deva said he believes it is important that the Rajneeshees be prepared to defend themselves if necessary. "They'd like us to kiss their feet as they lead us to the gas chambers . . . . But we're not going to let them step on our rights . . . . We're prepared to deal with whatever would come.