The main impact of even a limited improvement in relations between arch-rivals Syria and Iraq, as is now being hinted by Arab diplomats and analysts, is likely to be on the Iran-Iraq war in which Syria has been Iran's major Arab ally.

Should such a reconciliation emerge, it might please both Moscow and Washington, who are concerned about the prospect of a victory by Iran in the nearly six-year-old conflict. But it would undoubtedly disappoint Israel and Iran and perhaps further isolate Egypt within the Arab world.

Hints from the Middle East recently suggest that some improvement in Syrian-Iraqi relations may be imminent, due mostly to persistent efforts by moderate Arab states of the Persian Gulf.

Even a temporary truce in their abiding, if sometimes interrupted, feud could produce the appearance of emerging cohesion in the badly divided Arab world.

But the heritage of bad blood between the rival branches of the Baath Party in power in Damascus and Baghdad is such that cautious specialists suggest that little more may result than a suspension of the Arab world's accelerating disarray.

The Arab world no longer projects the confidence and limitless wealth that characterized the last, short-lived reconciliation proclaimed between Syria and Iraq at the Arab League summit in Baghdad in 1978.

The collapse of crude oil prices, the unending violence in Lebanon, the unresolved conflict over the Western Sahara claimed by Morocco and Algeria, the breakdown of the Jordanian-Palestinian peace initiative and the Reagan administration's increasingly close de facto alliance with Israel have all contributed to reduced Arab aspirations.

So cynical have Arab world analysts become that some speculated that Syria may merely be going through the motions of seeking a partial normalization with Iraq in order to extract fresh concessions, such as renewed shipments of oil from Iran. Oil shipments were suspended when Syria failed to pay its bills.

If Syrian President Hafez Assad reopens the Iraq Petroleum Co.'s pipeline to the Mediterranean and accepts other so-called technical measures designed to please Saudi Arabia and the other Persian Gulf Arab states, his decision will be dictated by the virtual bankruptcy of Syria's economy.

Syrian officials who acknowledge their need for transit fees and injections of gulf oil-generated cash insist that their political opposition to Iraqi President Saddam Hussein remains intact.

The most visible indication of a would-be reconciliation, pointed to by diplomats, has been provided by Jordan's King Hussein, who made two trips to Baghdad earlier this month and then visited Damascus last week. Hussein, in an unusual step, also dispatched his prime minister, Zeid Rifai, to Athens earlier this week to meet with Syria's Assad, who was visiting Greece.

Outmanned three-to-one, with no end of the gulf fighting in sight and with Iranian troops having a key toehold around the Faw region inside Iraq, Baghdad apparently is willing to settle for even a minimal Syrian gesture in hopes that Damascus eventually can be persuaded to make more meaningful political gestures by Jordan, Saudi Arabia and other oil-producing moderate gulf states.

Iraq, which has built a pipeline to Saudi Arabia and is doubling the capacity of another across Turkey, is less dependent on the trans-Syrian pipeline than it was in 1982 when Assad closed it to please Iran.

Syrian officials argue that the near bankrupt economy leaves them little choice. They apparently hope that their economic argument will help soften Tehran's opposition to the rapprochement and minimize any Iranian-inspired violence in Lebanon.

But Syrian hopes of gaining favor with the West by persuading Iranian-backed groups to free western hostages kidnaped in Lebanon may be dashed, specialists say.

In Arab eyes, that setback would be more than counterbalanced by the growing possibility that Syria will withdraw its de facto veto and allow the first normal Arab League summit to be held since 1983.

Any improvement in Baghdad-Damascus relations is also sure to please Moscow and Washington, who share fears that a triumphant Iran would endanger their interests in the Middle East by spreading Tehran's brand of fundamentalist Islam within their respective spheres of influence.

Yet, barring unforeseen changes in Iranian policy, Syria's change of heart is not expected to persuade Iran to negotiate an end to the war.

Continuation of the war is widely viewed to be favored by Israel. But Israel may argue that even the most transparent rapprochement constitutes a danger to its security by freeing Iraqi forces, the most battle-tested, if war weary, of Arab armies.

Likewise, Israel's friends in the United States can be expected to cite rapprochement as evidence that Saudi Arabia, Jordan and other moderate Arab governments have even less reason to acquire U.S. weapons if the Iranian threat against them has decreased.

Any improvement in Iraqi-Syrian relations could also stymie Egypt's efforts to win full readmission to Arab councils, as the Arab League may invoke something approaching Arab solidarity to argue that Cairo's separate peace with Israel is still beyond the pale.