They laughed when Nancy Lussi said she could turn what was once a huge bowling alley into a two story shopping mall, furnish it with English antiques and stained glass and save money doing it.

It's unlikely that the architects and designers who scoffed at Lussi 's statements are laughing now. Lussi proceded to do exactly what she said she'd do and Bethesda Square - an unusual 28-store mall at the corner of Woodmont Aveue and Old Georgetown Road - is now in its second year of operation. Last year the $1.6 million project won the Owen Kuhn Cup presented by the Bethesda-Chevy Chase Chamber of Commerce for excellence in design.

What makes Bethesda Square different from conventional small malls and their larger counterparts is ambiance.

The mall's exterior is done in English manor or Tudor style. Interior decorations are from the colonial, Federal and Victorian periods. The hallways are of brick and resemble the narrow, hilly street signs, large stained glass windows, wrought iron artifacts and plants in large copper pots festoon and interior. Shoppers sit on wooden benches, not concrete slabs. Set in the center of the mall is the piece de resistance - an impressive carousel that was built in 1915. The mall's only discordant touches are Muzak and several large potted plastic plants.

Nancy Lussi has no formal training in engineering or architecture.But she grew up in the business and says she has a talent for saving money on projects.

The cousin of developer James Rouse, whose credits include Columbia, Md., Nancy Lussi was treated to lectures on architecture from her mother as she was driven to and from school. But it was her late father, builder Sherman Hollingsworth, who influenced Nancy Lussi the most.

Hollingsworth, whose developments include Palmer Park in Prince George's County, insisted that his daughter play with blocks rather than dolls and regularly took her whim him to projects he was supervising. While a student at Mt. Vernon College she furnished the interiors of several of her father's projects.

However, Lussi says of her father's strip developments, "I never thought they were very attractive.And I don't like modern architecture that comes out looking like an ince cube tray."

Lussi's husband, developer Craig Lussi, a 1960 Olympic ski jumper and president of Potomac Mortgage's Co., is a partner in the mortgage firm with Kingdon Gould, parking lot magnate and former ambassador to the Netherlands and Luxembourg. When Lussi decided to do something with an old bowling alley in Bethesda's Woodmont Triangle area, he asked his wife to take on the project.

She says, "I got the job because I've done it cheaper. Craig and I had collaborated on two other small malls - Seven Locks Plaza and Fairfax Mall - and I'd kept the price down on those. The artifacts are accessible. After three times I know the places to look, the people who run the antique shops."

According to Craid Lussi, "Nancy saved us about $200,000 or 15 per cent of the total cost of the projdct." He explains, "In the conventional route you end up paying three times: for the architect, the builder and the subcontractors." The Lussis used an architect only as a consultant, to vertify the structural integrity of her plans and to comply with the country code.

Nancy Lussi's childhood training proved useful when it came to saving on supervisory costs. "My father taught me that there's no substitute for on-site supervision and that's what I did."

Her husband recalls, "Nancy stood there and directed the bricklayers and carpenters and told them to move a wall or replace something if she didn't like the result. Changeovers like that would cost a bloody fortune by the conventional route.

"In keeping with the mall's distinctive layout and decor, the Lussis hav definite ideas about commercial tenant niix and about the sort fof clientele they wish to attract.

"We're striving for upper-middle and upper income rather than middle income shoppers," says Nancy Lussi. "We don't want six shoe stores. We people can't find in large mails. We don't want two of the same kind of stores."

Stores in the mall include the Premlata Juice Bar; This End Up, which features furniture made out of shipping crates; Bethesda Square Tennis Club; 'Plant Alive!"; Swensen's Ice Cream Parlor; the K-B Baronet twin theaters and the Grenadier, which specializes in "militaria" - books, prints, war games and hobby and decorative items.

Rick Sheridan, owner-manager of the Grenadier and a 28-year-old "retired" stockbroker, says he chose Bethesda Square partly because the mall's interior is "really suitable for the kind of thing I'm trying to do . . . It conveys the atmosphere of a military tradition."

Sara Flemer, manager of This End Up, which has another store in Alexandria, says "We liked the uniqueness and easy access to Wisconsin Avenue. The place has a lot more personality than other locations with comparable commercial rates we looked at."

Although the two mails are quite different in concept and size - which makes a comparison less exact - commercial space at Bethesda Square rents for $10 to $17 a square foot and includes a finished store, while space at White Flint, according to Lussi, costs $10 to $35 a square foot. Additional construction costs anywhere from $15 to $65 a square foot, says Lussi.

Several stores say that business is starting to pick up, but concede that the recognition process is a slow one.

Helen Ross, owner-manager of Ampersand Books said that before Christmas, "a lot of people didn't know the mall existed." Ross added that the initial lack of a merchant's association reduced advertising possibilities. "Everybody's a pretty independent personality here," she says. "I think in a lot of the major malls more things are pre-decided."

With Lussi says, "The marketplace is getting smaller here. There's no market for more and more White Flints. You can't keep saturating the market or you just overlap and kill you business."

Nancy Lussi and her husband are considering a number of other projects, but are not sure what they'll tackle next. One thing is certain: if Nancy Lussi is responsible for the renovation and decoration, no one will mistake if for an ice cube tray.