THE First Amendment school-prayer case argued before the Supreme Court recently is about more than pray-er. It is about whether Americans can live together with diverse beliefs and still find a way to respect and tolerate those beliefs in their public and private lives.Between now and the ruling expected next spring, the Supreme Court must find a new interpretive basis to accommodate both a traditional acknowledgement of Deity and the religious pluralism of the United States, which is broadening its base. A way can be found. But it will require more maturity and sophistication on the part of citizens and the Supreme Court with regard to religion and public life. Conceivably the court could take a strict separationist line and rule all religious expression - from the president's inaugural oath and Thanksgiving proclamation to prayer that opens Congress - to be a form of religious "establishment" and thus unconstitutional. Such a ruling would hardly represent either the tradition of civic piety in the US or the present sentiment of Americans. The specific case involves a federal court ruling that a prayer offered by a clergyman during a 1989 Rhode Island public middle-school graduation ceremony was an "establishment" of religion by the state, hence not permitted. Unfortunately, both sides argued extreme views. Counsel for the Rhode Island school officials said states have a right to choose an official religion as long as they don't coerce their citizens into accepting it. This is an incredible lapse of judgment. No state, under almost any reading of the Constitution, can adopt a religion as "official." Period. Opposing counsel, however, argued strict separation - saying prayer should be as off limits at a graduation ceremony as in a classroom. Hence, by implicati on, prayer has no place in public life. The problem with strict separation, as Justice Anthony Kennedy writes, is that carried to its extreme it doesn't promote government neutrality toward religion nor protect minority rights, but rather "reflects an unjustified hostility toward religion." Prayer does not belong in the classroom. But a graduation ceremony is different. It is a symbolic passage into a larger, public world. That world should teach tolerance and respect for religion and religious diversity. The "wall of separation" between church and state is a powerful concept that protects both state and religion. But as Ronald Thiemann, dean of Harvard Divinity School, notes, the "wall" metaphor has come to be interpreted too simplistically and neglects the implications of the First Amendment clause protecting "free exercise" of religion. Public prayer is symbolic. It should not be sectarian. But it can, symbolically, support "free exercise." A public acknowledgement of Deity and of a higher meaning to life does not have to abridge constitutional rights. The court may set broad guidelines, interpreted locally, of what is fair and non-sectarian. New cases will bring refinement.