NEW YORK / NEW & IMPROVED

I smell pretzels and incense, and I see a weapon-wielding man loose on 42nd Street. He points, pulls the trigger, and scores of children and parents giggle.

Meanwhile, up on 47th, about 1,500 tourists and Manhattanites gather to shower applause on two dozen pimps, prostitutes and porn producers.

Be clear about this: After all this neighborhood’s years as a symbol of urban America at its sleaziest, the tidying of Times Square is a success. More light, less blight, less crime. Everyone with sense is encouraged. But sometimes, amid those bright lights and mimes and preachers and ironies and weird nostalgia, it’s a strange place to sort out.

The gun-wielding man, for instance, is 20-year-old Dalton Blake, an otherwise shy young man who has been hired by the novelty store DAPY to wear a Batman outfit and stand out front waving a soap-bubble-blower shaped like a revolver. When he fires, his barrel ejects a stream of delicate, many-colored orbs, which tremble and waft, catching in their glimmers the lights of the Disney theater and emporium across the street.

As for the pimps, prostitutes and porn producers, they occupy the Ethel Barrymore Theater as the cast of “The Life,” a musical set amid the squalor of Times Square circa 1980.

So goes life in the new Times Square, where media and entertainment conglomerates, retailers, restaurateurs and hoteliers are investing fortunes; where grand old theaters have been restored; and where hard-bitten city folk grouse that Disney has papered over a rare reserve of good old urban grit. This kvetching even spilled over into a New York Times haiku contest last month, when Patricia M. Murphy of Manhattan wrote:

Bring back the porno

42nd Street bellows

Mickey denies us.

Beneath the blazing lights of Broadway, cops are seen on foot, on horses and in their own little neon-lighted substation. Between 1992 and 1996, crime in the area fell about 45%. That steep drop has leveled off recently, and ticket-scalping is actually on the rise, but three-card monte dealers, those fast-talking guys throwing down folded cards on cardboard box tops, are all but gone.

Aside from the NYPD, the Business Improvement District staffs the 32-square-block area with 40 public safety officers from 10 a.m. to midnight and 50 sanitation workers from 6 a.m-10 p.m. Clad in bright orange jumpsuits, they thread their way through the peddlers of wristwatches and sunglasses, spearing trash and scouring pavement.

But that doesn’t mean this is Fisherman’s Wharf without fishermen. The salty old flavor of Times Square isn’t gone, just diluted, and unlikely to disappear any time soon. This is a neighborhood whose principal product has always been illusions and diversions. The product line is just broader now: It spans from the appalling to the almost innocent, instead of from the appalling to the merely untidy.

Yes, there is much for kids in the new Times Square, from arcades to live theater. But as you stroll with them, bear in mind that around the corner you may encounter a friendly cartoon character or a smirking poster girl disclosing prodigious cleavage.

In the new Times Square, you never know. It’s the kind of place where:

* You step out of your renovated hotel, marvel at the lack of litter on the sidewalk, look up to admire the bright dance of the stock-market numbers, corporate logos and theater marquees on the walls of the urban canyon--and find yourself facing a man, recently arrived from Bangladesh, who hands you a card conferring free admission to the continuous topless entertainment at Flashdancers, not a block away. Certainly the porn shops have dwindled. There were 120 or more in the 1970s; about 20 now. But they make their mark. (I was particularly intrigued by The Playground on 8th Avenue, which offered something called a Siamese Connection. Then I realized it was a notice for firefighters, pointing out an adjacent two-piped water hookup.)

* You cross 40th Street one sunny afternoon and notice a gutter suddenly coursing with water (perhaps from a flawed Siamese Connection). Then you see a bearded man in rags stoop to bathe himself in the gutter.

* You slink down the corner of 42nd Street and Broadway at nearly midnight on a balmy Friday, and find the wonderful world of Disney merchandise, still resounding with the pleas of children and the consequent kachings of commerce. Just outside, teens of many nations, and many boroughs, throng the sidewalk, listening to a percussionist paradiddle artfully on lead pipes, tin cans and trash can lids. Inside, parents buy jewelry, baseball hats, videocassettes. A young couple pushes a stroller, looking for something in a Dalmatian theme. By the door, the security guard is counting the minutes until lockup. Then suddenly the cashier, Michelle, looks up and says “Oh, my god! Look at the tie section!”

Trouble. Mickey, Tigger, Donald and Winnie the Pooh are all askew and rumpled. Just when the authorities think they have a handle on doings after dark down here, something like this happens.

*

There are 37 live theaters in the Times Square area. Thirty-eight shows opened on Broadway during the 1996-97 season, drawing a collective audience of nearly 10.6 million, the highest figure in 16 years.

And of all those shows, I chose “The Life.” Despite the enthusiastic audience, suffice it to say I’d rather have lost my $40 to a three-card monte dealer.

At least it was a half-off ticket. In Duffy Square, on Broadway between 46th and 47th streets, the TKTS stand sells same-day tickets to Broadway shows for 25% to 50% off, beginning at 3 p.m. for evening performances.

Every Friday at noon, the Business Improvement District sponsors a free two-hour tour of the theater district, beginning at the visitor center in the otherwise idle Selwyn Theater, 229 W. 42nd St. On the tour I joined in October, a well-versed young actor named Lawrence Frommer welcomed three dozen tourists from Ohio, Virginia, England, Argentina, Brazil, Germany, Taiwan, Korea, Japan and Queens.

Times Square’s current revival began well before 1995, but it was in December of that year that the first theater on 42nd Street was reclaimed. The 100-year-old New Victory Theater, formerly an X-rated movie house, was remade into a venue for stage productions aimed at young audiences, the only venue of its kind in the city. Soon after, the neighborhood added the Virgin Megastore, which claims to be the largest store of its kind anywhere, with more than 1 million CDs.

Restaurants came too: Caroline’s Comedy Nation, an All-Star Cafe and the Russian Firebird, an upscale eatery that brought Czarist opulence to the long-standing Restaurant Row on West 46th Street. A David Copperfield Magic Underground restaurant is due to open at Broadway and 49th in February.

But the key moment may have been October 1996, when the 18,000-square-foot Disney Store and the Times Square Brewery (with its $4.25 pilseners and panoramic city-lights views) blinked awake as 42nd Street neighbors. They stare at each other across 7th Avenue, jolting commuters as they climb from the central subway station just below.

In spring of 1997, Disney completed its $34 million renovation of the New Amsterdam Theater on 42nd Street. The Broadway production of “The Lion King” opens there this month. Meanwhile in the Palace Theater at Broadway and 47th, Disney’s other animated-feature-turned-stage-show, “Beauty and the Beast,” is well into its fourth year.

And the drumbeat continues. In late December, the Ford Center for the Performing Arts (a few steps from the New Amsterdam on West 43rd) debuts with a production of “Ragtime.” Next spring, the Warner Bros. merchandise store opens at 1 Times Square.

On 52nd Street at rush hour, a distinguished and goateed guitarist celebrates Thelonius Monk’s birthday four days earlier with a nimble rendering of “Straight, No Chaser.”

And on the same afternoon, up near 49th Street, I came upon a Jimi Hendrix impersonator, noodling his distorted way through “And the Wind Cried Mary,” while a businessman in white shirt and tie stood by spellbound, nodding and appraising the finger work.

Disney’s not manufacturing these moments yet, is it?