In this picturesque city nestled against the Rocky Mountains -- invariably described just a few years ago as ground zero in the culture wars -- moderation is making a comeback.

Birthplace of the state's 1992 anti-gay rights initiative struck down by the Supreme Court last year, spawning ground for Colorado's tax rebellion and home to so many fundamentalist religious organizations that it has been called the "Vatican of evangelical Christianity," Colorado Springs had a reputation -- deserved or not -- for intolerance and venomous, values-based politics.

But as this booming metropolis of nearly 500,000 heads toward the new century, moderate voices are being elected to its municipal offices, voters are approving new taxes to preserve open space and defeating measures pushed by tax-cutting guru Douglas Bruce, and once-polarized factions are meeting regularly over dinner and narrowing their differences. The largest gay foundation in the country has even made Colorado Springs its home.

And if those weren't enough signs of change, consider this: Ground Zero, the local gay organization founded in response to passage of the anti-gay rights initiative known as Amendment 2, has joined the Chamber of Commerce.

"We've had five years of cultural war here, and it hasn't done anything for the town except divide it and ruin its reputation," said attorney and longtime resident Greg Walta. "People want to get ahead with building a positive community."

"Moderates," said John Weiss, publisher of the alternative weekly the Colorado Springs Independent, "are mobilizing to reclaim this community."

To be sure, Colorado Springs has a way to go before it ushers in an Aquarian age of political and social harmony.

There are still plenty of skirmishes in the schools over family values, sex education and the teaching of "scientific creationism." The local Republican Party structure is dominated by religious conservatives who last year imposed an antiabortion litmus test on candidates for the state central committee. And the legislative delegation from the area has a distinctly Wild West, patriot movement flavor to it. Witness state Sen. Charles Duke's accusation this past spring that House Speaker Newt Gingrich (R-Ga.) and former education secretary William J. Bennett masterminded an alleged burglary at Duke's home because they oppose his patriot sympathies.

On the whole, however, the political pendulum in Colorado Springs appears to be swinging back toward the kind of live-and-let-live attitude that has long been a hallmark of the West in general and this city in particular.

Politics here have always been right of center, influenced by the local newspaper, the Gazette-Telegraph, as well as by a huge military presence anchored at the Air Force Academy, the Army's Fort Carson, the U.S. Space Command and other installations.

But in the late 1980s and early 1990s, the conservatism seemed to take on a harder edge as disputes over abortion, gay rights and other values issues escalated. At the same time, dozens of fundamentalist Christian organizations, recruited by local economic development officials, were settling here. Today, the area is home to the national or international headquarters of more than 60 such groups, ranging from the obscure Fellowship of Christian Cowboys to the large and influential broadcast ministry Focus on the Family, which has a budget of nearly $90 million and 1,300 employees.

Amendment 2, the voter initiative barring communities from enacting ordinances protecting the civil rights of homosexuals, solidified Colorado Springs's reputation in some circles as a place hostile to gay men and lesbians -- and anyone else with alternative points of view or lifestyles. The amendment got its start here, pushed by a local organization called Colorado for Family Values.

There were other skirmishes as well. Under pressure from citizens opposed to protecting the rights of homosexuals, the city dismantled its human relations commission. Parents sued one school board to prevent the teaching of mythology until it added instruction on the Bible, and they protested a student-organized forum on diversity that was to include a discussion of homosexuality.

"It was very, very hard to be a gay person in Colorado Springs in 1992," remembers Katherine Pease, who now serves as executive director of the Gill Foundation, which from its office here funnels most of its $3 million in annual giving to gay causes. "It was hateful, and I don't use that word lightly."

In retrospect, passage of Amendment 2 may have been the high-water mark for Colorado for Family Values and its allies. Shocked by its success, moderates and progressives in Colorado Springs began organizing to confront what they regarded as an intolerant minority.

Several hundred joined a fledgling organization called the Citizens Project, whose goals are to promote pluralism, religious freedom and separation of church and state. In addition to monitoring attempts to inject religious instruction into the public school curriculum, the Citizens Project publishes voters guides, conducts seminars in using the political process and puts on "Dialogue Dinners" that bring together, on a regular schedule, people of diverse viewpoints in hopes of bridging political and cultural divides.

The business community, too, became alarmed that Colorado Springs's reputation as a hotbed of political and religious extremism might slow the city's growth, and it now emphasizes recruitment of high-tech industries rather than nonprofit religious organizations.

The "highly inaccurate portrayal of what the community is really like" by the national media has in a few cases hurt the city in recruiting new businesses, and hurt existing businesses in recruiting new employees, said Rocky Scott, president of the Greater Colorado Springs Economic Development Corp.

To develop a new generation of leaders with a broad vision of the community, the Chamber of Commerce Foundation has begun a "leadership institute" this year, and its first class of 24 includes business executives, union organizers and community activists.

"What we saw was no one was really able to rally and develop a consensus about the future of this community," said foundation president Cathy Robbins. "This community has not been very kind to emerging leaders."

Meanwhile, some less strident voices have been elected to city and school offices. This past spring, as a result, the new mayor and city council quietly and with little controversy adopted a policy of "zero tolerance" for discrimination of any sort, including on the basis of sexual orientation, against municipal employees.

A broad coalition that included the environmental and real estate communities won citywide approval of a sales tax increase to finance the purchase and protection of open space, a vote that Walta called "a landmark in a town that gave birth" to the state's anti-taxation movement. Earlier this month, the city rejected 4 to 1 a proposal by tax opponent Bruce to sell off some city-owned assets, a defeat Bruce said was a result of low turnout, not diminished enthusiasm for slashing government.

Will Perkins, the founder of Colorado for Family Values, says the group is as robust as ever, though it now emphasizes education and small-scale organizing rather than high-profile fights over what it believes is "preferential treatment" for homosexuals. "Our mission has changed for the time being," said Perkins, a Colorado Springs car dealer.

To others, however, Colorado for Family Values appears to be losing steam. It was rebuffed in an effort to get one local school district to adopt a policy of promoting "traditional marriage" in its curriculum. A petition drive urging local governments to enact a "community standards" resolution fizzled for lack of support. And the group was ridiculed when one of its officers charged the town fathers of nearby Manitou Springs with promoting homosexuality by naming a civic improvement effort the "Rainbow Vision Plan."

To Frank Whitworth, the head of Ground Zero, that marked the turning point in Colorado Springs. "Up to then they had been this unbeatable force," he said. "All of a sudden, here they were not only stopped in their tracks but laughed at. . . . They're not dead and they could be dangerous again, but their influence in our community is significantly diminished."

As far as he is concerned, Whitworth said, now "I feel more comfortable living in Colorado Springs than anywhere else in the country." CAPTION: Katherine Pease said being gay was "very hard" during gay rights battle. CAPTION: Resident Greg Walta said the people of Colorado Springs "want to get ahead with building a positive community."