When Ronald Reagan and Helmut Kohl chose this serene town in the verdant Eifel hills to signal postwar reconciliation, the German and American communities here looked forward to an event that would symbolize the unusual harmony that has marked their integrated lives.

As Bitburg's Mayor Theo Hallet likes to point out, more than 5,000 American-German marriages blossomed here since the United States opened an air base near the town that was destroyed by American bombers and artillery in World War II.

The air base is the town's biggest employer, with more than 700 Germans working there, topping the vast Bitburg brewery that produces the town's renowned Pilsener beer.

Even when the White House learned that 49 Nazi SS troopers were buried in the town's Kolmeshoehe Cemetery, where the two leaders agreed to lay wreaths, the 12,500 Germans and 10,600 U.S. airmen and dependents did not expect to witness a controversy that would stigmatize the town as a resting place for dead Nazis.

They recalled that American, French and British commanders of nearby units had been coming to lay wreaths at the cemetery for more than two decades, and they saw no reason why the U.S. and West German heads of government could not do the same to honor fallen soldiers.

But the furor exploded beyond belief for the people living here as for Germans elsewhere in the country, leaving many of them bitter and resentful toward the U.S. news media, and wondering whether they ever will recapture the tranquil and trusting spirit that had marked relations between West Germans and Americans here.

As he watched several hundred Jewish protesters press against a cordon of policemen bearing shields and rubber nightsticks, a middle-aged resident who refused to give his name angrily denounced the photographers he had seen tramping through the cemetery in recent weeks.

"It's a shocking scandal," he said. "I saw them taking flowers from other graves to dress up the SS tombstones. They would even put little American and German flags to make a better picture."

He glanced again at the throng of Jewish demonstrators, some bearing signs that read, "To honor the SS is to accept murder," and "My brother's blood cries out from the ground." Then he tossed away his cigarette in disgust and left.

"Before all the headlines about Bitburg, we were known as a town where the American servicemen and their families liked to live," Deputy Mayor Werner Pies said. "Now we are bitter about millions of Americans thinking of this as the place where Nazis are buried."

Police Chief Bernd Wiese, whose forces kept the public hundreds of yards away from the cemetery today as Kohl and Reagan held a seven-minute commemoration for German war dead, expressed chagrin about having to mount a massive security operation that portrayed the town as if it were in a state of siege. "It is not easy for us," he said. "All Germans at this moment are being confronted with mixed feelings."

He later had the riot-control police manning the crowd barriers remove their helmets, apparently so they would look less menacing.

Kohl and Reagan walked through the cemetery, passing near the SS graves, as a West German Army unit played a somber drum roll. The two leaders then arranged the flowers and ribbons on large wreaths as they were placed at the foot of a stark memorial tower at the cemetery.

The two stood in silence for two minutes to pay tribute to the nearly 2,000 German soldiers buried there. The graves were adorned with flowers laid in recent days by women from the local German-American Friendship Society, reportedly in response to suggestions from the Bonn government.

Reagan was accompanied by an American war hero, retired Gen. Matthew Ridgway, 90, and Kohl by a former Luftwaffe ace fighter pilot, Gen. Johannes Steinhoff, 71, who shook hands in a symbolic act of reconciliation. As the ceremony unfolded behind the massive security force, Josef Jobelius, a local resident, condemned Reagan's visit as "an imperialist, not conciliatory" gesture.

Herbert Dzur, who lives not far from Bitburg, took a contrasting view. Holding a sign that read "Thanks for liberty" in English and German, Dzur predicted that the uproar over the Reagan visit would make Germans more appreciative of his determination to follow through with his conciliatory gesture at the cemetery.

"The Germans in this area are strongly pro-American, and we intend to stay that way," he said.

One of Bitburg's few Jewish citizens, Chaim Rosenzweig, admitted he felt under some pressure from foreign Jewish groups to join their protests against Reagan's cemetery visit. But he said his sentiments leaned more toward forgiveness.

"How can someone be against the trip here if it is done out of a sense of reconciliation?" he asked.