BOOK REVIEW : A Brighter Picture of Small-Town Misery : DEAR JAMES; <i> Jon Hassler</i> ; Ballantine $21, 448 pages

Something very nice must have happened to Jon Hassler. He’s cheered up.

For years he has been writing about the little Minnesota town of Staggerford (primarily about the parishioners of its local Roman Catholic church) and there hasn’t been--in my memory--one cardigan sweater that didn’t smell funny, one nose that hasn’t been runny, one day that didn’t have too much humidity in the summer and way too much snow in the winter.

Hassler’s characters, too, ranged from sad to bad to moronic and back again. You got the feeling the author didn’t like them very much.

But not here. “Dear James” takes up the tale of Agatha McGee, the sixth-grade teacher who corresponded for so long with a soul-mate across the sea in Ireland, only to visit him and find out, crushingly, that James O’Hannon was a Catholic priest.

It’s three years later, and Agatha is 70. She hasn’t written him since. Her emotional loneliness has been compounded by the fact that St. Isidore’s elementary school, where she’s taught the basics to the entire town for almost half a century, has been closed because of finances. Agatha feels lousy; she’s begun to watch television by herself.

The novel opens with a holiday dinner from Hell--a Thanksgiving feast for a few of the town’s other lonely souls, including a New Age nun whose mindless drivel drives Agatha bats; the nun’s crazy old dad, a gibbering, sex-crazed moron who is sure that Agatha is “a devil in bed,” and a depressed Vietnam vet who has terrible flashbacks of dead women and babies.

But even in this picture of small-town misery, you can feel that the author is up to something different. The sex-crazed old coot is so off the wall. His nun-daughter is so demented. There are so many dead babies in the veteran’s tortured mind. These people really do have nowhere to go but up.

The author addresses himself to that question: Can life get better, in the midst of despair? Can people at death’s door live good and useful lives? Can love transform? Can good triumph over evil?

Well, what the heck. Why not? In one novelistic swoop that echoes E. M. Forster--and I promise I’ll never mention Forster in these particular pages again--Hassler picks up Agatha, her own parish priest, Father Finn, her best friend Lillian and a few others and flies them to Italy on a pilgrimage. Italy, as Forster well knew, is like a geographical Vitamin B shot. They immediately turn to the sweet joy of being alive.

This is a “Gallileo tour,” run by Finn’s brother, an atheistic college professor, so incompetent that he gets Agatha to tutor his students. Of course, O’Hannon, her correspondent of old, turns up in Rome.

He’s dying of cancer, but guess what. What if he doesn’t die of cancer? What if the Pope spots him at an enormous papal audience and gives him a secret message? What if he and Agatha and Finn leave the tour and kick back in the enormously beautiful town of Assisi and live for a few days like blessed human beings--taking walks, soaking up the sun, checking out the beautiful art, talking together from heart to heart?

Back in Staggerford, a venomous villainess, so dastardly I won’t even mention her name, plots Agatha’s downfall, besmirches her spotless reputation, turns all her friends against her. But what if good really does triumph over evil, and what if people really do have a choice--however tenuous--in how their own destinies turn out?

This is a very ambitious novel. Hassler brings together the landscape of Northern Ireland and Vietnam and suggests that good people can possibly mitigate old geographies of violence both publicly and privately, one good deed at a time.

He also addresses the ethics of organized religion: It may contain a lot of nitwits, but its opposite, atheism, offers only negation, subtraction, the absence of a belief system.

Hassler has fun in this novel. His demented sex fiend is wonderful, his Vietnam vet is desperately funny beyond his sorrow and the papal audience--where a swing band plays show tunes--is a set piece any writer would be proud of.

All this brings up the vexing question: Maybe the author wasn’t all that depressed in his previous novels. Maybe I was. This gives me the chance to go back and read them all again to find out.