Republicans fight to make Windy City a two-party town. Local concerns drive white, ethnic voters to GOP. CHICAGO

Disappearing ad benches, precinct armies, questionable brochures, traitorous cousins, and even a ``no new taxes'' sweepstake - it's all part of a block-by-block fight to establish a two-party system in Chicago. Amid the Democratic fortress of Chicago politics, President Reagan is leaving behind a small garrison of elected ``Reagan Democrat'' Republican officeholders.

These street-smart, white-ethnic, ex-Democrats are fighting to preserve that legacy beyond Nov. 8, in battles that make the presidential election look a lot kinder and gentler.

In the white-ethnic 23rd Ward on the Southwest Side, one of the city's strongest remaining Democratic organizations faces one of the strongest new upstart GOP organizations.

George Bush even came to the ward over the weekend to tell residents to vote for Republican State Sen. Bob Raica, who is in a tough reelection battle.

The vice-president, however, may not have as much clout as neighborhood party chieftains and precinct captains.

Senator Raica was campaigning door to door in the ward when he suddenly felt like someone was watching him. ``This guy's been following us for about 15 minutes,'' said Raica, pointing down toward 57th Street.

It was a Democratic precinct captain. He dared Raica to cross 57th Street into his precinct. If he did, he said, he would follow Raica door to door as a one-man ``truth squad.''

Earlier, a Republican ad bench disappeared from a busy bus stop near a ward Democratic headquarters. No witnesses.

Polish-American music star Bobby Vinton was scheduled to perform at the Bush rally until he got a call from an influential Democratic Polish alderman and dropped out.

Issues such as police protection, racial divisions, family ties, and street cleaning decide votes here, and new Republicans engage in shenanigans of their own.

One Chicago Democrat-turned-Republican, State Rep. Sam Panayotovich, was featured in controversial state GOP campaign literature claiming that murderers and child molesters in Massachusetts support Democrat Michael Dukakis.

Another white-ethnic Chicago Republican candidate wondered what all the fuss was about, since Democrats win the absentee-ballot vote from the Cook County Jail hands down anyway.

An ex-Democrat running as a Republican for Congress is giving away cash prizes of as much as $1,000 to constituents who write ``no new taxes'' on a slip of paper and mail it in.

And the white Republican candidate for county recorder of deeds, formerly a Democratic alderman, issued campaign literature that inexplicably included a prominent photo of his opponent, who is black.

Meanwhile, Mr. Panayotovich and his Democratic opponent, who is expected to do well in black areas of the Southeast Side district, face a third-party challenge from a black man who was the bodyguard of Panayotovich's GOP political mentor.

Back on 57th Street, Raica heatedly told the Democratic captain that he would return, and he continued through another precinct. Raica has been passing out an endorsement of his campaign from a cousin of a Democratic opponent who happens to work for him.

In this confusing world of Chicago politics, the Democratic candidate is a former GOP precinct captain. Residents greet him warmly, taking note of the ``St. Rita's Fathers Club'' jacket he's wearing in an area where ``public school'' is a dirty word.

Many white ethnics here complain that city services for their neighborhoods have declined since the days when they dominated City Hall, which is now occupied by a black mayor's administration.

``Sam is still Sam'' is the reassuring main plank in Panayotovich's campaign platform as Republican. He converted while in office and says despite the change in label there probably won't be much difference between his votes and those of a white-ethnic Democratic legislator.

Republicans need to hold on to three state legislative seats in the city they won through election or conversion in the Reagan years and pick up a new county office to prove realignment, several committeemen say.

Thomas Roeser, a Republican political analyst, says long-term realignment will take several more years, just as the earlier switch of blacks to the Democratic machine spanned a dozen years or so in the '30s and '40s.

Mr. Roeser says the real significance of realignment will lie in a burgeoning political movement of white ethnics in the city and suburbs, rather than just the beefing up of some old-style city GOP precincts.

``Just as the blacks are overwhelmingly motivated by a movement,'' says Roeser, ``I think the hard-pressed white ethnics with postage-stamp-size lawns have not just racist ideas but are concerned with property taxes, police, and fire protection. That ends up being a movement.''

Former county Democratic chairman, Edward Vrdolyak, running now as a Republican for clerk of the circuit court, is behind in the polls because of his past as the late Mayor Harold Washington's nemesis in racially divided city politics. But he remains popular in some white neighborhoods. The 23rd ward GOP committeeman claims a poll here showed Mr. Vrdolyak with a slightly higher name recognition than President Reagan.

In a bar across from a steel plant on Chicago's Southeast Side, a mainly Hispanic group wears ``Viva Vrdolyak'' buttons and plays pool as if realignment had never happened.

Joe Mendiola, a Republican precinct captain who formerly was Democratic precinct captain, says he just helps people with the same questions and complaints about public housing, garbage, and clean streets.

``We're still here,'' Mr. Mendiola says. ``We're not here today, gone tomorrow. That's what the people want - someone who will be there no matter what, regardless of the party.''