As American and Iraqi diplomats exchanged public hints and private notes about how to sit down and talk to each other, officials on both sides expressed optimism yesterday about prospects for a peaceful settlement of the Persian Gulf crisis.

Secretary of States James A. Baker III said there was an "excellent chance" world opposition could persuade Iraq to withdraw from Kuwait. Abdul Amir Anbari, Iraqi ambassador to the United Nations, said his nation "was prepared to talk about all the issues that exist in the region" with "no reservation and no condition."

At the same time, Baker reiterated that the demands made in 12 U.N. resolutions were not negotiable. "We are not going to negotiate short of the United Nations resolutions," Baker said. "We shouldn't do that. We are not going to do that. And I hope that we can put that to rest with this statement." Baker said Iraqi President Saddam Hussein would avoid an American military attack if he complied with U.N. demands.

Top U.S. officials said Iraq and the United States were still at a delicate stage in working out parameters of the talks President Bush proposed on Friday. But suggestions emerged that the United States was prepared to alter Bush's original proposal.

Bush had said U.S. allies in the gulf would attend the talks in Washington, but administration officials hinted yesterday that they could now accept bilateral talks with Iraq, with no allies present. Bush has proposed sending Baker to talk to Saddam in Iraq and to receive Iraqi Foreign Minister Tariq Aziz at the White House.

Administration officials who insisted on anonymity emphasized that they did not regard the Iraqi Revolutionary Command Council's statement on Saturday as an official acceptance of Bush's offer to talk.

"While we are aware of the statements of the Revolutionary Council and other public statements by Iraqi officials, we are involved in private exchanges that do not yet amount to an acceptance of the offers," said one official.

In the meantime, Saddam said in a French television interview that the chances of war or peace were "50-50."

"If this meeting is to be a true path to dialogue, then we are closer to peace," he said. "But if this meeting is to be nothing more than a formal exhibition for the American Congress, the American people, and for international public opinion . . . then we are closer to war."

In an apparent show of force, Iraq launched surface-to-surface Scud missiles in a test within its own borders. "The flight path of the missiles was away from U.S. and coalition forces," the U.S. military's General Information Bureau in Saudi Arabia said. "The firing appeared to be part of a test and training mission."

There were reports that allied troops in the gulf went on alert after the test. A Pentagon spokesman said the military does not release information on the alert status of its forces.

Top administration officials used yesterday's interview shows to sound the complicated themes now at the heart of American policy -- that the United States is willing to hold discussions with Iraq to avoid war but does not regard them as "negotiations" and remains adamant on the fundamental demands of the United Nations.

Appearing on NBC News's "Meet the Press," Baker said the United States was still demanding "complete withdrawal from Kuwait, restoration of the legitimate government of Kuwait, freedom for the hostages."

Baker sought to encourage Saddam by saying he could avoid attack if he met these demands. "There's never been any suggestion that force would be used if the United Nations resolutions are fully complied with," Baker said. "That would give some assurance, it seems to me, that if he complied with the resolutions, his reward for that would not be a military attack by the United States."

The statement was significant because administration officials have made it clear that their concerns about Iraq transcend Kuwait and include grave worries about Saddam's access to chemical and nuclear weapons. Baker appeared to leave open the possibility that other issues Saddam has raised could be negotiated once he withdrew his forces from Kuwait.

Still, both Baker and Defense Secretary Richard B. Cheney reiterated the broader U.S. concerns. Appearing on ABC News's "This Week With David Brinkley," Cheney pointed to "Iraq's enormous military capability" and "its desire to develop even more nuclear weapons, ballistic missiles, et cetera." He called for sanctions "targeted specifically on those technologies."

Baker said he saw an "excellent chance" for Iraqi withdrawal if Saddam is convinced of world unity against him as evidenced in the U.N. resolutions. "Once he understands very clearly that the entire international community and the United States as a whole is determined to see that happen . . . then we have really something that we can use diplomatically to achieve a political solution," Baker said.

As officials staked out their public positions, diplomats sought to nail down exactly how the United States and Iraq would carry out their discussions.

Joseph Wilson, the U.S. charge d'affaires in Baghdad, delivered Bush's invitation on Friday to the No. 2 official in the Iraqi Foreign Ministry, an administration official said. In return, Wilson was given questions from Saddam about the talks.

The official said most of the questions were "procedural in nature," but some were substantive. The State Department sent its replies to Baghdad Saturday and was still awaiting a response last night, officials said.

An administration official said the Iraqis' inquiries suggested that if the United States demanded that Kuwait and other U.S. allies be included in the Bush-Aziz talks, Iraq would insist that Palestinian representatives be included in the Baker-Saddam talks in Baghdad. The U.S. counterproposal suggested that the talks include only American and Iraqi officials.

Brent Scowcroft, Bush's national security adviser, hinted at this resolution during an appearance on CBS News's "Face the Nation." Scowcroft said, "Perhaps the best thing to do is to make the talks bilateral on both ends so that we don't get into haggling about the shape of the table or anything like that."

Baker reiterated U.S. opposition to including the Israeli-Palestinian issue on the agenda. "What we're going to say when he asks about the Palestinians is: 'We don't think you invaded Kuwait to help the Palestinians, and if you did, all you've done is hurt the Palestinians,' " Baker said.

Although the administration's call for talks with Iraq has reduced domestic opposition to the gulf buildup, there were still dissenting voices.

Appearing on the Brinkley program, former secretary of state Henry A. Kissinger said he was "deeply worried" that Bush's new direction could prove "extremely dangerous."

He warned that if the United States began talks, others would inevitably interpret them as negotiations and it would become "extremely difficult, if not impossible," to hold the anti-Iraq coalition together as other nations began opening "their own lines to Baghdad."

Asked about Kissinger's criticisms, Baker argued that the American public wanted talks before going to war. "If force ends up being used, we owe it to the American people and to others to show that we left no stone unturned in the search for peace," Baker said.

Sen. Edward M. Kennedy (D-Mass.) said the administration ought to give the sanctions against Iraq far more time to work than the 45 days now left until Jan. 15, the date the U.N. resolution sets as a deadline for Iraqi withdrawal from Kuwait.

"What I have serious reservations about is that we are on a path towards a war," Kennedy said. "And when the bullets start flying, it's going to be the Americans who are going to experience casualties. Ninety percent of the casualties will be Americans. And I don't believe that that's right."

But Baker insisted that "no one can tell you that economic sanctions standing alone will ever get" Saddam out of Kuwait.

Meanwhile, Muhammad Ali flew out of Baghdad with 15 American hostages whom Saddam released after talks with the former heavyweight boxing champion. Also on the Iraqi Airways flight were two Canadian and six British hostages.

Staff writer David Hoffman contributed to this report.