They walked down Vermont Avenue toward the Potomac River the other day and halted at Massachusetts Avenue. They looked south and saw unpalatable things: offices, offices, offices -- downtown Washington. Then they looked north, to items they regard as more tasteful: the Victorian houses of their neighborhood, Logan Circle.

The two strollers, Rob Moon and Bob Hammack, don't want offices like those to the south to mingle with the homes of the north. Specifically, the president and treasurer, respectively, of the Logan Circle Community Association frown upon a complex of offices, stores and apartments that has been proposed for their side of Massachusetts Avenue, the artery that severs downtown from the largely residential enclave to the north.

"Logan Circle has declared Massachusetts Avenue as the Maginot Line," Moon said. "The developers are not to come this side of the line."

With Logan Circle, it's always something.

It is a reborn area of some of the most original and historic homes in the District of Columbia, but one chronically ensnarled in the nettlesome issues of big city life. For the moment, it's commercial development versus residential preservation. Before, it was prostitution and the displacement of poor residents by more affluent newcomers. Illegal drug sales always lurk, and the homeless arrived in noticeable numbers a couple of years ago.

These are predictable problems when a residential neighborhood lies next to a downtown area, as Logan Circle does.

While many who live there were drawn by its proximity to downtown, they must cope with other people drawn by that very same proximity.

The downtown is a magnet for prostitutes, who find clients there. The homeless come downtown because many shelters are there. And downtown developers always are seeking new sites for projects.

Logan Circle, said association Vice President Barbara Rothenberg, is "sort of like Poland," the country caught through history between two huge powers, Germany and Russia. "Poland wouldn't have all its problems if it wasn't right in the middle," said Rothenberg.

Still, the Logan Circle of today -- Moon said the association represents the area bounded by Massachusetts Avenue and 9th, 16th and T streets -- is not the Logan of 15 or 20 years ago.

What was once an urban experiment where middle-class professionals settled in a raw and damaged old neighborhood now is a gentrified fact. The pioneer era is over. Where homes once could be had for $5,000, they can cost $500,000 or more today, though the reward is usually a rehabilitated jewel.

"When I moved here in 1975, most of Rhode Island Avenue was boarded up," said Jackie Reed, who lives in a house of stained glass and fancy woodwork on Q Street. Now, she said, "I'd put these houses up against any of them in the city."

Reed's comments show that Logan Circle has returned to what it once was.

In the late 19th century, it was a place of the monied. Alexander "Boss" Shepard, who oversaw the building of public works in the District back then, took what was still farmland and gave it sidewalks, gas lines and wide streets. The speculators followed, according to a 1973 report prepared by Turner and Satterlee Associates.

Around a grassy circle from which radiated Vermont and Rhode Island avenues and P, Q and 13th streets sprouted an integrated neighborhood that was a blend of richly designed Victorians and more modest row homes. Once called Iowa, the circle came to bear the name of John A. Logan, a Civil War general whose statue dominates the circle. In time, the surrounding area also took its name from the general.

After World War II, Logan Circle slipped and faded, with many of the homes becoming rooming houses. Riots sparked by the 1968 assassination of the Rev. Martin Luther King Jr. devastated the nearby commercial corridors of 7th and 14th streets, adding to the decline.

And even after newcomers began taking chances on Logan Circle in the early 1970s, the neighborhood continued to suffer from a problem: prostitution.

"There was a pimp on every corner," said Jim Smith, former president of the community association.

Residents became famous for their aggressive counteractions, which at one point included trying to discourage the prostitutes' clients by slapping bumper stickers on cars that announced the occupant had frequented a prostitution zone.

That problem is much-reduced now. And some longtime residents sense they are no longer living as close to the urban edge.

"We used to feel it was a full-time job to live here," said Rothenberg, a real estate agent who played a key role in the neighborhood's revival and lives in an 1883 house on Logan Circle itself. "It's much better now than it used to be."

It's no longer cheap, but residents cite the same pluses as previous homeowners: Logan is close-in; it is racially and economically complex; and it has character.

Two years ago, for example, Donald and Christine Brooks paid $100,000 just for the privilege of owning a battered shell on 13th Street, and have poured $170,000 into it since then. But, said Donald Brooks, they love "the energy that urban living gives you."

Brooks said Logan was "probably one of the better integrated neighborhoods in the city," a cross of old residents and new, upper-income and lower-income people.

"I just like the urban scene," said Brooks, who works at St. Elizabeths Hospital.

"People are willing to pay for the big old houses and for living close to downtown," said Moon, who works at the Pentagon.

But while improved, Logan is not paradise. Illegal drug sales, said Moon, are a "serious problem." While the commercial life of 14th Street is significantly better than it was years ago, with theaters and new restaurants, there still is a frayed quality to much of it. And residents said Logan has become home to several shelters for the homeless.

According to the neighborhood association, there are 325 overnight or temporary beds on or near 14th Street from N to R streets. While Moon said Logan Circle was willing to have shelters, it has a disproportionately large share now.

"You have ... aggressive panhandlers who bother people," Rothenberg said, adding that the neighborhood's annual picnic this year was moved from the grounds of Logan Circle itself to a back yard because of the problem.

Smith, in fact, said that he would soon begin living in Florida for much of the year, in part to escape "all these pressures" of the homeless, petty crime and prostitution. "It's got to change," he said. "And I don't know how to handle that."

Moon said, however, that Logan Circle's biggest concern is development, most notably a proposal to replace the Washington Plaza Hotel at Thomas Circle with a complex sponsored by a partnership led by Richard Cohen and Jerome Golub.

Originally, the group proposed a 130-foot-high complex of 682,000 square feet, which the D.C. Zoning Commission rejected as too large. Logan Circle's opposition "certainly persuaded a majority of the commissioners," said Cecil B. Tucker, secretary to the commission.

A spokesman for the partnership said that another, smaller proposal would be submitted, though he was unable to provide its exact dimensions. He said, however, that the group views "it as a project on the circle, not in the neighborhood."

Tucker, however, said because the project would be the first north of Massachusetts Avenue, "it's not unreasonable to think that if that imaginary line were crossed, another developer might try to piggyback off that."