FAIRVIEW Elementary is an inner-city school in every sense of the word. Located in Denver's poorest neighborhood, the tawny turn-of-the-century building houses a student body as diverse as the United Nations: Asians, Hispanics, native Americans, Arabs, Anglos. Most live in federally subsidized housing. The school posts chronically low scores on nationally standardized tests. Now, however, Fairview is part of an ambitious experiment to turn around basic reading and literacy skills in one of the nation's more troubled public school systems. If successful, it will hold lessons for other schools in the city - and perhaps across the country. If not, it will send educators and administrators back to the chalkboard - and act as a blow to the district's back-to-basics-minded new superintendent, Irv Moskowitz. Indeed, this will be a key year in the history of Denver Public Schools. Mr. Moskowitz is asking taxpayers to vote for a $30 million property-tax increase this November to pay for an ambitious slate of reforms. Among these is something Moskowitz calls ''school restaffing and redesign.'' Schools where students perform poorly on standardized tests ''and other objective measures'' would be placed on probation for a year or two. If they failed to improve while on probation, the schools would be closed over a summer and reopened in the fall with an entirely new staff. At Fairview, district administrators have allocated a disproportionate chunk of the district's federal money intended for low-income neighborhoods - $240,000 compared with $57,000 last year. While the school staff welcomes what that money can buy, it could turn out to be a mixed blessing. If Fairview can't turn that money into higher test scores - and fast - the school could become a guinea pig for a restless and reform-minded superintendent. No one in the school district is saying Fairview is a test case for reforms being pushed by Moskowitz, but that's clearly what is happening. Moskowitz is beginning his second year on the job, and he's made boosting test scores and increasing literacy among elementary school students his top priorities. When a superintendent espousing these kinds of ideas heaps money on a particular school, the message - and the implied threat - should be clear. Still, Tom Elliott, Fairview's principal, says he feels no unusual pressure. ''Every school feels pressure to have its kids succeed, but it's internal pressure,'' he says. ''That's why we're here. If we didn't feel that pressure, we wouldn't be much good.'' Chris Pipho of the Denver-based Education Commission of the States says Moskowitz's restaffing and redesign plan is ''bold and really unique nationally. I think it is a neat idea. I think what we are seeing is that Moskowitz wants to make site-based management of schools work, but he understands that for that to happen, he has to make some changes in places and ways visible to the common person out in the street.'' MOSKOWITZ has his work cut out for him. For the past 10 years, the DPS has suffered through varying degrees of turmoil. Some of Moskowitz's predecessors made bold promises about reforming the 63,000-student district. But those promises led nowhere. The result: hostility and more than a little skepticism among parents, community leaders and the public at large. That's one reason why Moskowitz wants to boost test scores quickly. A tangible improvement would show people he means business. Although one school-board member has complained that Moskowitz is ''obsessed'' with test scores, the superintendent insists it's illiteracy that troubles him. Historically, a significant percentage of DPS elementary students have been unable to read at their grade level. Moskowitz wants to see that change. ''As we look toward the future of this district, we'd better realize that what we produce in the first and second grade will be with us for quite a while,'' Moskowitz says from his office overlooking downtown Denver. ''A good many of these kids off to a poor start will have a heck of a time catching up. A lot of our focus has to be on this.'' That's why Fairview is getting extra help. Without any extraordinary action, things figured to get worse at the school this year. The school board decided to ''de-pair'' Fairview from its more affluent, mostly white busing-partner school in south Denver. Board members reasoned that Fairview - with 10 percent of the students Anglo, and large numbers of Asians, children from Middle Eastern nations, blacks, Hispanics, and native Americans - is naturally integrated. The de-pairing means that now, almost all students remaining at Fairview live in federally subsidized housing. School district officials figured this qualified Fairview for a larger share of the district's federal Chapter 1 money. Chapter 1 is a program designed to pump money into local school districts, particularly those that deal with low-income families. The infusion of Chapter 1 money has allowed Fairview's Elliott to launch what he promises will be a radical redesign of the school's literacy curriculum. Elliott has hired two additional reading specialists and three paraprofessionals. He has also bought an abundance of new books and other materials, and launched an ambitious staff training program. Beginning this week, teachers and reading specialists will begin what Elliott calls ''the marathon process'' of evaluating each student's reading and writing ability. Individualized plans will be created for each of the school's 350 students. Elliott stresses the federal money will not be used only for poor readers. ''If [the kids are] reading at grade level, we'll get them above,'' he says. ''If they're already above, we'll get them even higher.'' Several Fairview teachers say the emphasis on literacy is long overdue. When the district announced this year's literacy push at Fairview, dozens of teachers applied for positions. ''People wanted to come here because we will be on the cutting edge in terms of developing this literacy program,'' Elliot says. ''There is a real sense of optimism here.''