NEWS ANALYSIS : THE IRAN-CONTRA REPORT : Experts Fear Lessons of the Scandal Lost : Cover-Up: It could happen again, one says. Another believes the public mistakenly views the matter as analogous to Watergate.

While some details of the Iran-Contra scandal may be in dispute, independent counsel Lawrence E. Walsh’s findings in no way alter the tale of a secret foreign policy gone wrong.

Indeed, as it has unfolded over the past seven years, the plot has proved too thick for any fiction writer to concoct:

First, President Ronald Reagan made a decision to sell arms to Iran in opposition to his own policy to remain neutral in the Iran-Iraq war.

Second, Reagan’s aides usurped the constitutional role of Congress by using the arms sales profits and money from other countries to help fund a civil war in Nicaragua.

Finally, there was a cover-up that allegedly involved top Cabinet members, including the nation’s chief law officer, then-Atty. Gen. Edwin Meese III.

“The complexity of Iran-Contra should not obscure the facts of what happened,” said Rep. Lee H. Hamilton (D-Ind.), who co-chaired the congressional investigation. “As a small group of government officials decided they knew what was right for the United States, they kept it secret from the Congress, they showed disdain for the law and acted totally in conflict with the Constitution.”

Even though the story may be familiar, many experts fear the lessons of the Iran-Contra affair have been lost during many years of tedious investigations, partisan wrangling over details, repeated denials on the part of key figures and an outcome that did not involve either the impeachment of the President or the imprisonment of his top aides.

Former Sen. Warren B. Rudman (R-N.H.), who also played a leading role in the congressional investigation, said that while the Iran-Contra scandal is likely to cause presidents to think twice before they defy the Constitution, there is no guarantee.

“It could happen again, if a president wants to risk everything to act in defiance of Congress,” Rudman said.

Harold Hongju Koh, a professor of international law at Yale University and author of a book on the subject, said that the nation has mistakenly seen Iran-Contra as a typical White House scandal--similar to Watergate--instead of a crisis brought on by an antiquated system of shared foreign policy-making by the President and the Congress.

“We have a 21st-Century foreign policy operating with a 19th-Century apparatus,” Koh observed. “As a result, we have these cycles. First, the President does anything he wants in foreign policy. Then there is an attempt by Congress to rein in his power. That leads to a period of micromanagement by Congress. And then we return to the President acting unilaterally.”

By failing to develop a post-Cold War mechanism that would allow the President and Congress to develop a foreign policy consensus, Koh said, the government has ignored the principle lesson of Iran-Contra.

Unlike the Watergate scandal--which led to the resignation of President Richard Nixon, the conviction of many top White House aides and the enactment of many new legal safeguards--Iran-Contra has had limited fallout.

As Walsh’s report clearly states, while Reagan overstepped the powers of the executive branch, there was never any evidence that he engaged in criminal wrongdoing. As Hamilton observed: “You cannot pass a law that makes sure that a President cannot subvert the Constitution.”

And the task of prosecuting White House aides charged with wrongdoing was complicated by the unique political circumstances of the case.

When Congress granted limited immunity to former White House aides John M. Poindexter and Oliver L. North for their congressional testimony, it impeded Walsh’s task. Convictions of both North and Poindexter were overturned by an appeals court on the immunity issue.

The prosecution had so little sting that North, whose gap-toothed grin and swashbuckling style made him a folk hero to many Reaganites, is now running for the Senate from Virginia by capitalizing on his celebrity.

In retrospect, neither Hamilton nor Rudman regrets that Walsh’s prosecution was hampered by the grants of immunity deemed necessary to bring the story of Iran-Contra to light.

“If you remember back then,” Rudman said, “the executive branch was paralyzed. The country was waiting to see if we were going to have another failed presidency. We needed to grant immunity to determine whether the President of the United States should be impeached.”

Cynics such as Scott Armstrong, executive director of the Information Trust--a private group seeking to reduce government secrecy--and the author of an Iran-Contra book, fear that the scandal will be remembered primarily for the successful efforts of Reagan’s top aides to obscure their misdeeds.

“The bottom line is that cover-ups work,” Armstrong said.

Not only did many top government officials admit lying to Congress after the Iran-Contra plot was first disclosed in late 1986, but Walsh discovered that considerable evidence had been withheld from the Iran-Contra investigating committee in Congress, including diaries of both then-Defense Secretary Caspar W. Weinberger and then-Vice President George Bush.

But Tom Blanton, executive director of the National Security Archives--a think tank that followed the Iran-Contra affair--argues that even though the President’s top advisers escaped being jailed for criminal offenses, Walsh’s investigation produced a record of wrongdoing that will influence the final assessment of the Reagan and Bush presidencies.

“In a sense, they got away with it,” Blanton said. “But in the eyes of history, they didn’t. That may be the real value of a report like this: When future generations write their histories of this period, they are going to take the Walsh findings into account.”

Walsh’s role itself will be debated by historians.

Armstrong and other critics of government secrecy argue that the Reagan and Bush administrations succeeded in undermining the independent prosecutor’s investigation by refusing to declassify materials. In at least one instance, Walsh was unable to prosecute a CIA official involved in Iran-Contra because the Bush Administration withheld classified materials.

Despite these problems, Walsh won 11 convictions.

On the other hand, Republicans such as Rudman believe Walsh overstepped his mandate by spending nearly $40 million to conduct an investigation that produced little new information not uncovered by the 1987 congressional probe.