QANA, Lebanon -- Morning mist was still rising from the silvery leaves of a hillside olive grove when nine Shiite Muslim guerrillas set about their task: positioning a 106 mm recoilless cannon and preparing to fire a few quick rounds at an Israeli army outpost just across the ridge.

So the passing group of U.N. peacekeepers patrolling the rugged valleys of southern Lebanon did the only thing they could: They approached the guerrillas -- bearded, edgy, brandishing AK-47 rifles -- and very, very politely asked them to go away."I shook hands with each of them, and talked quietly and reasonably," recounted Maj. Jerry Tuikoro, gesturing toward the grove where he and his small contingent of peacekeepers from faraway Fiji had come across the guerrillas from the Iranian-backed Hezbollah a few days earlier.

The U.N. troopers, who are allowed to use their weapons only in self-defense, must rely under such circumstances on persuasiveness. This time, it worked.

"They were frustrated," Tuikoro recalled. "They're trigger-happy, some of them! But we just kept on talking, and finally they left."

Even though this particular encounter ended peacefully, the U.N. troops -- like most of the half-dozen parties to the muddled proxy war in southern Lebanon -- harbor few illusions about a real halt to hostilities any time soon. There's always another morning, another hillside, another weapon of choice.

Since its creation in 1978, the nine-nation U.N. force has had the same mission: to verify an Israeli troop withdrawal, help the Lebanese government reassert sovereignty, and establish a secure area. The peacekeepers are the first to admit none of the goals has been achieved.

"We've been fighting for our own survival, sandwiched between the warring parties," said Timur Goksel, a senior U.N. adviser. "Peacekeeping? You have to have peace to keep it."

In the 390-square-mile U.N.-patrolled zone, Israeli troops and their allied Lebanese militia do daily battle with the guerrillas of Hezbollah, along with fighters from other Islamic groups.

Also in the volatile mix is a dormant but potentially dangerous band of disaffected Palestinians who do not support Yasser Arafat's attempts to make peace with Israel.

"It's a microcosm of the Middle East," Goksel said of the U.N. zone, which runs inland from the biblical port city of Tyre toward the Israeli-occupied Golan Heights. "The amount of ammunition flying around is quite something."

With this welter of combatants, the peacekeepers often find themselves in the line of fire. Over the years, 222 of them have died.

In Israel, there is growing impetus -- driven by steadily mounting casualties of their own -- to find a way out of what is widely seen as a military morass. Israel keeps about 1,500 combat soldiers in a swath of southern Lebanon to protect northern Israel from cross-border attacks.

But in spite of Israeli sentiment in favor of a negotiated pullback, the stage could be set for an escalation of hostilities.

After Hezbollah guerrillas rocketed northern Israeli towns in December, the government of Prime Minister Benjamin Netanyahu threatened harsh retaliatory strikes, perhaps deep inside Lebanon. In one week in mid-January, Israel staged four straight days of air raids in the south.

The guerrillas say they will continue to exact revenge for the deaths of their own fighters as well as those of civilians. Their December rocket attacks came after a stray missile killed a Lebanese woman and six of her children.

Few know the war's toll on ordinary villagers better than the people of Qana, a shell-pocked market town 7 miles north of the Israeli border. The Fijian contingent of the U.N. peacekeeping force is based here -- a circumstance that had unintended and horrific consequences nearly three years ago.

On April 18, 1996, at the height of an Israeli bombing campaign against Hezbollah, about 800 villagers took refuge at the Fijian base, believing they would be safe there. Instead, the flimsy huts in which they were sheltering came under fire, and about 100 civilians died.

The exact number of dead remains unknown because the bodies of those killed, many of them women and children, were so badly mangled.

Near the site of the shelling, villagers have built a memorial of long marble tombs decorated with portraits of the dead. One of the shelled huts has been left as it was, except for a new roof. Blood-caked blankets and scraps of burned metal still litter the charred floor inside.

Nawal Bolgi, 48, who lost 20 relatives, wept as she recalled what happened that day. "Boom -- no more family," she said. "Everyone was dead."

Israel said the shelling was a mistake, and accused the guerrillas of causing the catastrophe by staging attacks from civilian areas in full knowledge they would trigger retaliation. But even if Hezbollah used villagers as a shield, support for the guerrillas has only grown stronger in Qana.

Posters of Hezbollah's leader, Sheik Hassan Nasrallah, are everywhere, and the town is dotted with arresting tributes to dead guerrillas: larger-than-life, colorfully painted metal cutouts of bearded young men in turbans and robes.

Villagers proudly describe the rituals undertaken by youths preparing to take part in Hezbollah operations: They perform ablutions, recite Koranic verses and write letters to their families telling them they are happy to sacrifice their lives.

"We have great respect for members of the (Islamic) resistance," said 70-year-old Kamel Foutouni, the town's mukhtar, or headman. "They're here in their own land, and it's their right to fight against Israeli occupation."

Although Hezbollah gets funds and weapons from outside, its homegrown brand of nationalism makes it all but impossible to eradicate the guerrillas.

"They're local guys," said Goksel, the senior U.N. adviser, who has spent 20 years in southern Lebanon. "They're villagers."

Even Israel acknowledges Hezbollah's growing sophistication has added to the difficulties of fighting a guerrilla movement -- a process likened by former Prime Minister Shimon Peres to "eating soup with a fork."

Guerrillas who once waged war with crude human-wave attacks now carry out meticulous and technologically advanced attacks on Israeli troops. Hezbollah's level of reconnaissance and planning is described as extremely high.

Lebanese villagers, who closely follow developments in Israel, are now nervous over the current election campaign, in which Israeli security is the key issue. Some fear a repeat of the Qana disaster, which came in the course of a major Israeli offensive in southern Lebanon before Israel's 1996 election.

Even amid such fears, there are indicators of guarded optimism.

More and more villagers, who fled north during earlier outbreaks of fighting, have been returning to homes in the south. Sumptuous villas with dramatic vistas of banana fields and blue Mediterranean are springing up on the hilltops -- even if most still stand empty while their owners wait to see if heavy fighting will resume.

As for the peacekeepers, they say they have some small successes to point to. Even if not backed up by firepower, their network of observation posts and checkpoints discourages movement of weapons and fighters. Relations with the Israeli military, long tense, are warming.

And the U.N. troops, who provide services to villagers ranging from medical care to generator power, are reaping a goodwill dividend after long years of service.

Strong bonds were forged during the Qana shellings, when blue-helmeted Fijian soldiers wept in the ruins as they tended the wounded. In the town's streets, the "tawareh" -- the word for peacekeepers in the local Arabic dialect -- are often trailed by a crowd of children.