ASK Maurice Sendak what we need more of in children's literature and entertainment, and he is apt to mention such things as honesty, empowerment, and respect.Mr. Sendak should know. In the past 40 years, he has become one of the best-known illustrators and authors of children's books. In 1970 he became the first American to be awarded the Hans Christian Andersen International Medal for his work. His more than 80 books have sold more than 7 million copies worldwide. The one he is perhaps best known for is "Where the Wild Things Are," which won the 1964 Caldecott Medal for most distinguished picture book of the year and ranks as one of the top 10 best-selling c hildren's books of all time. Recently, Sendak's "Nutcracker," written by E.T.A. Hoffmann and translated by Ralph Manheim, was released in paperback for the holidays. In an interview, the 63-year-old Sendak tells how the book grew out of his design work with the Pacific Northwest Ballet's production of the tale. "The frustration of it was you can only get a morsel, because the fairy tale is so long and so complicated and Tchaikovsky wrote only so many yards of music," he says. Later, when Crown Publishers approached him with the idea of the book, "I jumped because all that was left out on stage could be illustrated - marvelous, funny, and weird episodes. I had my cake and ate it: I could do the ballet and then do the inner pieces that were excluded from the ballet in the book." "Nutcracker" is a major work that brought E.T.A. Hoffmann back, Sendak says. When it came out in 1984, it made the New York Times bestseller list. (It was funny to see E.T.A. Hoffmann's name listed with the likes of Stephen King and Danielle Steel, he recalls.) Not surprising is Sendak's regard for a good fairy tale - one that is honest and empowers a child. He praises Grimm's fairy tales, which "imbue children with enormous power." Primarily, children don't have power, and we don't want to lie to them and say they do have power, he explains. But we want to imply that they might have power. Grimm's fairy tales "don't really say you can do it, they say through wisdom, through cunning, through honesty, through love, and through various means, you will survive and maybe achieve the things you most want to achieve. They're extremely honest in my opinion...." As for children's literature today - and children's entertainment in general - the outspoken Sendak says he is hardly encouraged by what he sees. Much of children's literature is primarily to make money for publishing houses, he argues. It tends to be saccharin and easy. "By and large - and I speak very generally - what [parents and grandparents] are attracted to are very sentimental, soft ideas." Society has a predictable and commercial view of childhood, says Sendak. "This is all ghastly to me." He lunges into a discussion of movies, starting with last year's holiday hit "Home Alone." "I detest it," he announces. Home Alone' is a nightmare to me because it's violent. And yet I've been yelled at, 'Oh relax Maurice, you take everything so seriously. It's just a funny movie and it's not meant to be serious.' But it really bothers me a lot because it's full of the most incredible violence and because it's not true that a child could protect himself in the face of this dementedness, or that the parents - it's not funny that they forgot him. I don't get it." He also recalls seeing a Rambo movie where kids would laugh as Rambo was "blowing up villages and annihilating hundreds of people, and you see them on fire. Kids were laughing. I'm lost on this planet! I no longer know how to respond to these things," he says, his intense eyes widening behind his glasses. Then there are movies that cyncially use children in commercial ways, he says. "The baby that speaks," he scoffs. "Vile!" Europe is way ahead of the United States in its treatment of children, he says, mentioning such countries as Italy, Germany, and Spain as producing "marvelous" movies for children. What was the last American movie for children he enjoyed? The Wizard of Oz.' I think it's the best movie Hollywood ever produced about a child; the most honest one." Somehow, in the face of all that children consume and enjoy in today's society, Sendak says he should probably resign himself to "maybe there's something there that's OK. Everyone put us down because we read trash and comic books, and we'd never be intelligent people; we'd always have poor taste. And the librarians threw up their hands - this is way back - because I refused to read a regular book. "So you have to be careful about putting down some of it, because kids devour everything - garbage pails full of books and movies and television - and you have to have a kind of innate trust in them that they can do that and then take out of that the essence or take out of that what suits them, and then they become scholars and professors and authors. I trust them to that." Nonetheless, Sendak feels a certain responsibility to improve the offerings. He's decided to phase out a lot of his working life as it has been for 40 years and invest in a children's repertory theater called "The Night Kitchen." The name is taken from his book "In the Night Kitchen." ("It's a nice image to me, where you cook up things," Sendak says.) As artistic director of the nonprofit theater, he will control what goes on stage and what's written. "I will use my experience as a writer and illustrator and stage designer, fuse all of that, and really try to create something," he says. The only thing that would stop him would be lack of funds, he adds. Acknowledging that there is a lot of good and bad children's theater in America, Sendak says m not a pioneer, I'm just trying to put my oar in a situation where children's entertainment might be improved on some level." Improved how? Offering what is "aesthetically complicated" and "not reductive and condescending," he says. Given a young audience with tremendously active minds, you should "feed them stuff that's rich and thick and intellectually stimulating and emotionally stimulating. That's the whole point, to be there and show your respect for that. ... Why shouldn't children be empowered by art? That's what I'd like to see happen," he says. At present, Sendak is working on an opera design for "Hansel and Gretel," which will be the first opera that has Night Kitchen's name on it. Also on his agenda is illustrating his "first grown-up book Herman Melville's novel "Pierre."