Vientiane, Laos – Among the more exotic casualties of the Indochina war, the long-nosed lion-elephant, the eternal Naga serpent and the magical Mom bird appeared to be on the verge of extinction in Laos.

These mythical creatures, once common throughout this tiny rural nation, were part of the symbolic vocabulary of traditional Laotian silk weavers, whose work fell victim to the chaos of the war and the social disruptions that followed it.

Now an American weaver named Carol Cassidy is working to revive an art that, like that of the dancers of neighboring Cambodia and the temple muralists of Thailand, has embodied the nation's cultural inheritance.

In a refurbished French colonial mansion surrounded incongruously by a white picket fence, she employs 40 weavers, dyers and bobbin winders to produce glowing fabrics adorned with the stars and ships and scrolls of Lao tradition, as well as the dragons, peacocks and butterflies of Buddhist symbolism.

But Ms. Cassidy is not a preservationist; her scarves and slipcovers and wall hangings bear her own contemporary stamp. For her, the ancient symbols are artistic forms rather than bearers of legend.

''I start with traditional patterns and techniques and I modify, interpret, translate, adapt into a product that becomes international,'' she said. ''The elements are traditional but the complete design is my own creation.''

A recent example is a wall hanging woven for Denise Tomecko, an American masseuse who lives here, who wanted an ornament that would complement a treasured deep blue Tibetan carpet.

Ms. Cassidy found Laotian symbols that echo the dragons and knots pattern of the carpet and arranged them in a severe symmetry that seems more Tibetan than Laotian.

''She made me something that was very Lao but was reconstructed and modified to blend with a Tibetan prayer rug,'' Ms. Tomecko said.

Ms. Cassidy's enterprise, Lao Textiles, was founded in 1990 -- the first American company licensed here after the end of the war in 1975, and still one of relatively few Western businesses in this country of 4.6 million people.

Laos was heavily bombed during the war when the United States tried to cut Communist supply lines in neighboring Vietnam. As in Vietnam, the Laotian war ended in victory for the Communists, who continue in power today.

Ms. Cassidy said her experience with Laotian officials had been excellent as they begin to open their country to foreign investment.

''They have honored everything they ever said,'' she said. ''Everything we agreed to in 1990 has been maintained, which is an incredible feat. I believe in the Lao's integrity and their deep commitment to their principles.''

Pitched to a small, high-priced and mostly overseas market, her business is thriving at a time when the Laotian textile industry has been badly wounded by recently imposed foreign tariffs.

She markets her products as one-of-a-kind ''original art'' rather than as mass-produced textiles, placing them beyond the scope of the tariffs levied on assembly-line manufacturers.

''Threads are our palette,'' Ms. Cassidy said. ''We weave art.''

Her work sells in American boutiques or is shipped on special order for cushions or upholstery. A scarf might cost from $85 to $125; a brocade wall hanging sells for $1,800.

''In local terms our prices are high, but they aren't high by international standards,'' she said. ''And I pay my workers professional wages.''

These wages can reach to nearly three times the average national income of $350 a year. Many of the weavers -- like Simone Bankeo, 28, whose husband is a university professor -- earn more than their husbands.

Ms. Cassidy, 41, is a native of Woodbury, Conn., and studied weaving at the University of Michigan and at the University of Helsinki, in Finland. She spent seven years in Africa, where she taught village women the art of mohair weaving.

She arrived in Laos in 1989 and spent a year training weavers for the United Nations Development Program before starting her business. It did not take long for her art to be recognized: it was displayed for three months in 1995 at the Fashion Institute of Technology in New York.

There is an air of intense concentration at the 20 looms in her workshop. The hands of the weavers perform a rapid, repetitive ballet as Laotian pop music plays quietly.

The brightly colored patterns emerge slowly. The workshop produces no more than 30 to 50 pieces a month.

On the concrete floor by a water cooler, a woman turns a spinning wheel. In a small room behind her, ropes of silk are dipped in imported chemical dyes mixed by Ms. Cassidy to match the colors of the less hardy local herbal dyes.

''This is my world, my cocoon,'' Ms. Cassidy said. ''It's bamboo, wood, silk. But it ends up -- if you look at Vogue -- in Valentino's Paris apartment.''

Along with the techniques of her workshop, Ms. Cassidy said, she also teaches her workers the concept of weaving as art. One of the first English phrases she taught her chief weaver and collaborator, Chansouk Phomalin, was, ''I am a designer.''

In this achingly poor and isolated country, Ms. Cassidy is fostering not only the revival of an art form but a rare standard of personal achievement.

''I've been rough with the workers,'' she said. ''I've introduced the idea of the critique. They need to understand this, because their work has never been integrated into the monetary economy. Everything matters. Every color matters. Every thread matters.''

[Images] Simone Bankeo, above, earns more money than her husband, a university professor, by working for Carol Cassidy, an American entrepreneur who is trying to revive the Laotian art of silk weaving. Map of Laos showing the location of Vientiane: Silk weaving is being revived in Vientiane, the Laotian capital.