The last time Sultan Abul Alaynen had dinner at his favorite restaurant in Beirut, the pickings were as delicious as always, the ground lamb heavenly, the salads divine.

He loved the meal so much, in fact, that he remembers the exact day and hour he ate it--which is poignant, since he won't be eating at the restaurant again any time soon.

Abul Alaynen is the top representative of Palestinian leader Yasser Arafat in Lebanon. That status gave him considerable cachet and clout, plus a Mercedes-Benz, gold rings and plenty of armed bodyguards, until one day this fall when a Lebanese military court passed a death sentence against him for inciting armed rebellion.

Now, Abul Alaynen is a fugitive from the law. He is holed up in a Palestinian refugee camp he controls in southern Lebanon, where Lebanese troops dare not enter to arrest him. He is also a symbol of what frightens Lebanon the most as its more powerful Middle Eastern neighbors, Israel and Syria, warily enter peace talks that could reshape the region: Will Lebanon's interests, and the lingering problem of the Palestinian refugees on its territory, be forgotten at the negotiating table?

Lebanon has much to gain in the new round of Israeli-Syrian talks announced Wednesday by President Clinton. In particular, it could see Israel withdraw from its self-declared security zone in southern Lebanon along the Israeli border, ridding Lebanon of Israeli troops for the first time in nearly 20 years.

Israel would pull out of that nine-mile-deep swath of Lebanese territory if it received adequate assurances from Syria that it could do so without risking cross-border attacks into Israel. Damascus, which maintains tens of thousands of troops and control in Lebanon, could make that promise as part of a package that won Syria the return of the Golan Heights.

But such a deal would do nothing to solve another big problem facing Lebanon: the presence of about 360,000 Palestinian refugees living in the country.

"Lebanon has a very critical demographic balance" among Christians, Sunni Muslims and Shiite Muslims, said Farid Khazen, a political scientist at the American University of Beirut. "And if all of a sudden you inject 360,000 Palestinians--Sunni Muslims--this is certainly a recipe for conflict."

The Palestinian refugees and their descendants in Lebanon fled or were forced from their villages in what is now northern Israel during the 1948 war that resulted in the Jewish state winning its independence. About half of them live in a dozen filthy, crowded,, desperately poor camps that dot the country from north to south. The original refugees have had children and grandchildren in Lebanon.

Their problem is that no one wants them. The Israelis say they will never be permitted to return to their old villages in Israel, which in many cases no longer exist anyway. If a Palestinian state is created in the West Bank and Gaza, its economy is likely to be too anemic to absorb many of the 2 million Palestinian refugees scattered throughout the Middle East.

Among the Lebanese, the attitude is hardly more hospitable. Almost no one thinks the Palestinians should be allowed to remain indefinitely on Lebanese soil. Few have been granted citizenship. Most are barred by law from most types of employment and often prohibited from fixing up the squalid camps where they live. Two-thirds or more of the Palestinians in some of the teeming refugee camps are jobless. For those who do manage to scrounge a job, usually in construction, wages are a pittance.

Lebanon would like the peace talks to provide for the Palestinians' departure, but it has real concerns about whether that will happen and lacks leverage to accomplish the goal. Beirut did not learn in advance about the resumption of Israeli-Syrian peace negotiations, and Lebanon will not be represented at the talks between Israeli Prime Minister Ehud Barak and Syrian Foreign Minister Farouk Charaa this week in Washington.

While the Lebanese will have a seat at the table when the talks move past the inaugural phase, and to a lower level, they will be Syria's junior partner. With the Syrian troops and hundreds of thousands of Syrian workers on its territory, Lebanon is in fact a satellite state of Damascus, not a truly sovereign party to the peace talks, analysts say.

"Syria will look out for Syrian interests, mainly recovering the Golan Heights," said a Western diplomat in the region. "If Lebanese interests are given a hearing at all, it will only be at Syria's say-so."

That kind of talk frightens the Lebanese. From the Lebanese perspective, the problem with the Palestinians is not only that they upset the demographic balance among rival Christian and Muslim communities. Many Lebanese also blame the Palestinians, along with Israelis, Americans and other outsiders, for providing the fuel for the civil war that laid waste to Lebanon from 1975 to 1990.

And while the Lebanese may be reluctant to recall the murderous fighting that went on among strictly Lebanese militias, they are generally quick to point fingers at the Palestinians, whose cross-border attacks on northern Israel led to the Israeli invasion of Lebanon in 1982.

The large and desperately poor camps of southern Lebanon still bear the physical and psychological scars of the fighting of the 1980s. Few of the refugees in Lebanon support the Middle East peace process, which they regard as a sellout of Palestinian interests that will leave them exiled from their homeland forever. Amid their shrapnel-scarred buildings and unsteady shacks, the southern camps are a hotbed of political extremism, criminality and intrigue.

Last summer, a few hundred armed men loyal to Arafat suddenly seized control of the Ein el-Hilweh refugee camp in Sidon, with 65,000 residents the largest of the camps in Lebanon. Abul Alaynen, who was behind the takeover, said he made the move at Lebanon's behest. Many believed the authorities in Beirut, as well as Arafat, were interested in keeping the camp under tight control as Palestinian talks with Israel on a comprehensive peace deal went down to the wire.

Then, in October, came the stunning news: A military court in Beirut had tried Abul Alaynen in absentia and convicted him of inciting armed rebellion, forming armed bands and damaging state property. The sentence was death.

"I care no more for my life than I do for my shoes," said Abul Alaynen, 47, tall and well groomed, his conversation tending toward the theatrical. "But at the moment I am a scapegoat."

The prospect of chaos in the southern refugee camps has triggered unpleasant memories for the Lebanese. They know that Palestinian cross-border attacks on Israel could make a mockery of Lebanese sovereignty and invite massive retaliation.

Foreign analysts say that no matter what the outcome of peace talks is, Lebanon will have to absorb some Palestinian refugees despite its ardent opposition to doing so.

"We believe we've paid our share and were victimized because of the Palestinians," said Khazen. "Our attitude is: We can't do any more for the Palestinians."

CAPTION: Sultan Abul Alaynen, a top Arafat aide among refugees, faces a death sentence.

CAPTION: Palestinians from the Ein el-Hilweh camp demonstrate Nov. 20 against Lebanese measures to beef up security around the camp.

CAPTION: REFUGEE CAMPS IN LEBANON

Lebanon is home to more than 360,000 Palestinian refugees, who live in 12 camps. The largest are Nahr el-Bared, with 39,936; Ein el-Hilweh, with 25,403; and Rashidieh, with 22,859.