TORONTO, SEPT. 14 -- The once-infallible Gregg Olson continued a recent string of exasperating derailings tonight. The Toronto Blue Jays rallied for three ninth-inning runs off the suddenly mortal reliever to pull out an 8-7 victory over the Baltimore Orioles before 49,893 at Skydome and avoid a second straight blow to their bid to remain in contention in the American League East.

Pinch hitter Rance Mulliniks slapped a two-out, two-run single to left field to tie the contest at 7, and pinch hitter John Olerud followed with a line single up the middle to win it. Olson's late collapse -- his fifth blown save of the season -- wasted Sam Horn's pinch-hit grand slam that keyed a six-run sixth inning and provided a 6-3 lead.

Baltimore was on top by 7-5 entering the ninth after Kelly Gruber's two-run double in the Toronto seventh and Steve Finley's sacrifice fly in the Orioles ninth. But Olson, who has allowed 16 hits and 11 earned runs in his last nine appearances, could not hold the advantage.

He has not regained form since being sidelined for nine days this month with soreness in his right elbow. His fastball has lacked its usual zip, and opponents have jumped on his curveball. Such was the case again tonight, with both Mulliniks's and Olerud's hits coming off curves.

"Mulliniks doesn't crush that ball, and neither does Olerud," said Orioles catcher Bob Melvin. "But they probably were sitting on the breaking balls. That's his best pitch, and you can't blame him for trying to get out of the game with it."

Olson (5-5) refused to emerge from the trainer's room afterward, but he clearly was upset with the call of home plate umpire John Shulock on a borderline 3-2 pitch to Fred McGriff. Shulock called the pitch a ball, and Mulliniks's heroics followed.

"Everyone on the field knew that was a strike except the guy who mattered -- the umpire," said Orioles Manager Frank Robinson, who denied that Olson still is ailing.

Toronto broke a two-game losing streak to improve to 77-68 and pulled within three games of first-place Boston in the AL East. Willie Blair (2-5) earned the unlikely victory with one-third of an inning of relief.

The Orioles, winners of five of seven before tonight and conquerers of Blue Jays ace Dave Stieb on Thursday, fell to 65-78.

Jimmy Key held the Orioles hitless for 5 1/3 innings, then departed with tightness in his right hamstring after David Segui's double in the sixth. Reliever Duane Ward came on and was hammered quickly and resolutely, yielding two hits and two walks before serving up Horn's second career grand slam -- and Baltimore's second pinch-hit grand slam of the season.

Baltimore's Anthony Telford already had departed following a 4 2/3-inning, seven-hit, three-run struggle. But the Orioles bullpen proved resilient until Olson's demise. Curt Schilling escaped the seventh after Jeff Ballard permitted Gruber's double, and Olson stranded Kenny Williams at third base by getting Junior Felix to ground to shortstop.

The Blue Jays have climbed back into the pennant chase with a combination of unusual resolve and superb pitching. Toronto appeared done three weeks ago after losing three of four games here -- and getting shut out in three straight in a high-intensity series against the Red Sox. But the Blue Jays have regrouped quickly.

"Everyone just assumed we were finished after the Boston series," Gruber said. "Everyone said, 'That's it for them.' Well, we've shut up a lot of people."

The Blue Jays were in control for the better part of tonight. They grabbed a 2-0 lead off Telford in the fourth on Rob Ducey's RBI single and Pat Borders's sacrifice fly. Toronto finished Telford and made it 3-0 an inning later on Mookie Wilson's two-out double and Tony Fernandez's run-scoring single.

Key was in control through the early going. But he has had problems with his hamstring all season, and he felt a twinge while pitching to Craig Worthington in the fifth. He walked the next hitter, Melvin, for Baltimore's first base runner.

When the Orioles got their first hit on Segui's low liner starting the sixth that eluded the tumbling try of center fielder Wilson, Manger Cito Gaston wasted little time in removing Key.

The floodgates opened soon thereafter. Ward, who had allowed only six earned runs in 37 innings over his last 19 appearances, got Bill Ripken to ground out.

But then Finley beat out an infield hit that scored Segui, pinch hitter Brady Anderson walked and Cal Ripken singled to right to load the bases. Mickey Tettleton drew a walk to force in a run -- his 100th base on balls of the season, making him the fifth AL player since 1970 to amass 100 walks and strikeouts in the same year.

Then Robinson sent Horn to hit for Worthington, and Baltimore had a 6-3 lead after he yanked a 1-2 fastball just over the right field wall at the 375-foot sign. The drive gave Horn 12 home runs and 37 RBI in 204 at-bats this year.

Orioles Notes:

Baltimore's Class AAA affiliate, the Rochester Red Wings, fell to Omaha, 9-3, tonight and lost the Triple A Alliance championship series, four games to one.

Pitchers Dan Boone and Mike Smith are scheduled to join the Orioles Saturday. Pitcher Mickey Weston and infielders Leo Gomez, Chris Hoiles, Juan Bell will join the team in Baltimore on Monday. . . .

Robinson said today he'd be willing to coach the 1996 U.S. Olympic team if asked -- even if it meant taking a year's leave of absence from the Orioles. The topic came up amid a discussion about the Olympic basketball team being headed by a professional coach, and Robinson spoke facetiously as often as not.

But he said finally that he was serious. "I'd do it," he said. "It would be a great opportunity." . . . The Orioles tonight surpassed 600 walks in a season for the 10th time in club history. . . .

Horn's blast surely endeared him to at least one Orioles fan -- Don Brown of Edgewood, Md., who won two Thunderbirds for the grand slam in WMAR-TV-2's home run sweepstakes inning.