Swing out 150 feet above the hairy bellies on the beach, high over the roller coasters' racket and the cotton-candied cheeks of toddlers, so high you see white sails flecked on New York harbor. Here, at the top of the Wonder Wheel, the world's biggest Ferris ride, the devastation below is forgotten.

Along avenues with such sunny names as Surf, Mermaid and Neptune, long-ago fun houses are smeared with graffiti. Once-majestic bathhouses sit empty, windows shattered. Soot spreads from burned-out buildings.

For a century, Coney Island was known as the "Poor Man's Paradise" at the bottom of Brooklyn, the place where the hot dog was invented, the first roller coaster was built and generations of immigrants found solace in fantasy. But during the last two decades, as the middle class made its way to suburban theme parks and grim public-housing projects rose in its midst, the playland became a war zone.

Arson, gang fighting and drug dealing reigned in the 1970s. New York City, nearly bankrupt, stopped building, cleaning, even caring. Steeplechase, the world-famous amusement park, had closed. There was talk of demolishing the rusted 271-foot Parachute Jump, a monument as evocative to many New Yorkers as the Statue of Liberty.

"It was scary," Brooklyn Parks Commissioner Julius Spiegel said. "It was a garbage dump."

But today, like the wondrous Ferris wheel, with its rusted, 65-year-old spokes and rickety cabs, Coney Island's fortunes are again reaching skyward. The city has leased the Steeplechase grounds to a developer for a $20 million amusement park with corkscrew coasters, water rides and a children's zoo.

Gargiulo's Restaurant, graced with three stars from a formidable New York Times' food critic, doubled its size this year with a million-dollar, marble-floored addition. The parks department is restoring the giant fishing pier and skating rink. The New York Aquarium, on the grounds of the old Dreamland Amusement Park, is raising funds for a $27 million expansion with penguins and performing dolphins.

"The name Coney Island is magic," said Horace Bullard, who started a Kansas Fried Chicken outlet on Surf Avenue in 1978 and owns $7 million worth of property here. "And the demographics are mind-boggling: 17 million people in a 50-mile radius."

Bullard, developer of the proposed new Steeplechase Park, traveled as far as Austria to find the best new rides. "How could we have let an historic site like Coney Island go down so dramatically?" he asked.

This Memorial Day weekend, a largely black and Hispanic crowd of almost 1 million people poured out of the subway to sample the rides, spook houses, shooting galleries and fast-food stands, including the original "Nathan's Famous," home of the hot dog. "No choque/No bumping," read the Spanish/English sign at Go Karts Speedway.

"If I had money, I would invest it in Coney Island," said Spiegel, who sees signs of gentrification.

Indeed, the yuppies are coming. Dressed in black, with a top hat and an original 1920s bathing suit, Dick Zigun, a Yale drama school graduate, was on the boardwalk last weekend barking at crowds through an antique bullhorn. A hand-lettered sign announced his avant-garde, vaudeville-style theater, "Sideshows by the Seashore."

"Coney Island is cleaning up its act," Zigun said, showing off the theater's museum with 1920s' freak-show banners touting "Midget Kangaroos" and "Armless Wonders." His nonprofit group is sponsoring the Third Annual Mermaid Parade June 22, with Mummers bands, floats, 100 antique cars and trophies for the most outrageous seaside costumes.

A visual-artists group has formed the Coney Island Hysterical Society, with a mailing list of 400. It pressured the city to save the Parachute Jump and is refurbishing a "Dragon's Cave" ride with vintage, handmade horror tableaux. "We function as an historical society, but we do it in a spirit of fun," said Richard Eagan, explaining the group's name. "There's a feeling of hysteria that Coney Island could disappear. If you spent enough time here, you'd be hysterical, too."

Last Tuesday, hard by handball courts where elderly Jewish gentlemen from Brighton Beach play in shorts and baseball caps, a film crew was shooting a commercial for McDonald's in Japan, with the Wonder Wheel as backdrop. The wheel's new owner, Denos Vourderis, a Greek immigrant who rose from owner of a hot-dog stand to become a millionaire concessionaire, was up to his elbows in greasy repairs, boasting that, when a producer shot a James Bond movie on the wheel recently, "They pay me plenty, believe me!"

Irving Berlin, Jimmy Durante and George Burns are long gone from the glittery cabarets here. Gone, too, is Al Capone, who worked here as a bouncer. Gone are the Wild Men of Borneo, premature babies in their incubators, the Lilliputian village of 300 midgets, Venetian gondolas in the Tunnels of Love, the Bearded Lady and all of the gaudy, freaky glories of decades past.

Still, Coney Island lives. Last year, a Rolling Stone reporter came to ride the infamous Cyclone and pronounced it "one of the oldest and funkiest roller coasters in the world." He lamented, "It's getting harder and harder to find the totally seedy amusement park with restrooms you wouldn't venture into without a flame thrower and rides with names like Whirl'n'Puke, operated by personnel who applied to organized crime for positions as street thugs . . . . "

Move over, Disney World. Honky-tonk is chic