The American people must be hard put to it to understand what is going on in the battle of words between President Reagan and Colonel Qaddafi of Libya. It is impossible to make a judgment regarding the administration's charge that Libyan terrorists have been sent to the United States to assassinate government leaders. There is yet no conclusive evidence of such plots. High officials of the FBI have voiced doubts, and the news report that a Lebanese was the source of the information has not been officially corroborated. Without facts in hand, many will view the matter with a certain amount of incredulity.
This is not to underestimate the potential threat, however. If there is in fact solid evidence of a Libyan plot, one would have to trust the US law-enforcement authorities to decide what tactic best serves protection of the President and others. On the face of it, so much public attention to the issue would seem to be the surest way of scattering the alleged Libyan hit men. Tracking down potential assassins and criminals is usually done quietly. On the other hand, it cannot be ruled out that the administration's hue and cry is designed as a defensive strategy to forestall any untoward incident.
Certainly Colonel Qaddafi is up to mischief in many parts of the world. His support of terrorists - the IRA, Black Panthers, PLO extremists - is well documented. Diplomats in Western Europe have been the target of attempted assassinations. In the past the US has thrown out Libyans because of their illegal activities, and just recently a trial was held of a man who tried to kill a Libyan student. Qaddafi has openly called on Libyans to attack socalled ''dissidents'' abroad who oppose his leadership and policies. Obviously Qaddafi represents a danger.
The issue, however, is how to deal with it. There is no question everything must be done to combat Libyan terrorism. But doesn't all the sensational publicity to it merely play into Qaddafi's hands, building him up into a superman able to challenge a superpower and thereby giving him more stature and exposure than he deserves? Such an approach is dubious. The better way would be to seek, through quiet diplomacy, an international quarantine of him. The Organization of African Unity, for instance, has already made its weight felt by persuading Qaddafi to withdraw his troops from Chad. It could also be helpful by reversing its decision to hold the next OAU meeting in Tripoli - an objective which US diplomacy might now reasonably pursue. Surely Libya's neighbors and the world community ought to join in containing a leader who is so unpredictable and troublesome.
Economic sanctions also are being talked about. But a boycott of Libyan oil by the United States would not materially damage Qaddafi. To be effective such a boycott would have to have the support of every country that buys oil from Libya. If imposed by the US alone, it would be largely a moral gesture.
As for military measures, the US should certainly respond to any Libyan provocation violating international law. Thus, it was merely upholding a point of principle when it ordered American jets to fire on Libyan planes attacking them in international air space. But deliberately seeking a military confrontation with Qaddafi would be risky and foolish. It would put the US in the position of looking the big bully and, again, make Qaddafi appear more powerful than he is. He could well pick up sympathy in the third world and the US would be the loser.
It all comes down to a matter of tone. Without pulling any punches when provoked, the United States nonetheless ought to maintain a calm and dignified posture that keeps Qaddafi in perspective and does not feed his enormous ego. It can work behind the scenes to achieve a diplomatic containment of him. It can try to improve ties with Libya, although that is problematic. And it can also improve management of the CIA, whose former agents have trained Libyan terrorists - an irony if there ever was one.
Meantime, the time is bound to come when the Libyan people will ask whether Libya's best interests are served by its present ruler.