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The Reagan Report: INC. hears that Rita Ricardo Campbell, a fellow at the Hoover Institution on War, Peace and Revolution at Stanford University, is high, high, high on a White House ”female list” to replace Margaret Heckler as secretary of health and human services. Though President Reagan is also keen on Anne Armstrong, a former ambassador to Britain and onetime cochairman of the Republican National Committee, he doesn`t like asking someone who will say nix. The Prez is being urged to select a woman, and Campbell headed a task force on Social Security for Reagan`s 1980 transition team.

The Rosty Report: INC. hears that Rep. Dan Rostenkowski (D., Ill.), chairman of the House Ways and Means Committee, deserves the lion`s share of the credit for the decision by Chrysler-Mitsubishi to locate the $500 million auto plant in Bloomington. When officials of the companies met with Rosty to discuss whether his committee would allow them to get the maximum allowable investment tax credits, he responded with the noncommittal nod made famous by the Japanese themselves in negotiations. You have to bet the Japanese businessmen understood this to mean that the plant would have to be located in Illinois before they could return to Rosty`s committee seeking the tax relief. OVER THERE . . .

— LONDON–Toss out all those rumors that Princess Diana finds her hubby, Prince Charles, boringgggggggg. British wag Nigel Dempster reports that Princess Di was seen sitting on her husband`s lap and ”nuzzling” his ear at a dinner party thrown by some friends in Chelsea. And later when the men retired to their port and cigars, Diana was found in the kitchen washing dishes and chirpppping, ”Isn`t it wonderful. Actually being allowed to do the washing up!”

— BERLIN–Political commentator Bruce DuMont sent INC. a touching memo from a recent tour of West Berlin. ”My guide took me to a remote crossing point (in the Berlin Wall) . . . and only the sound of a sobbing man broke the silence of the late night. . . . A young West German . . . about 25 years old was holding a flower, crying . . . and staring to the east. He kept repeating in German, `Why does the world allow this wall?` . . . And then his head dropped into his hands . . . then he slammed his fist on the railing and shouted in tears, `This wall must come down!` . . . We left. I looked back. The man`s head was still in his hands. It was a scene I`ll never forget.”

THE CITY MAUL . . .

— INC. hears that former Chicago Police Supt. James O`Grady will have two labor heavyweights in his corner in his bid to challenge Cook County Sheriff Richard Elrod: Edward Brabec, president of the Chicago Federation of Labor, and the Teamsters` Chicago chief, Louis Peick. Hmmmm. Didn`t these two fellas help talk him into running? You bet.

— Wrong way Medley. The CTA`s No. 8A South Halsted Street bus route was changed last month after a recommendation from the CTA board`s Operations Committee, but it became apparent after a few weeks that the new route wasn`t that great. So board member Howard Medley, who had originally moved for the adoption of the new route, just went out to the bus barns and told drivers to go back to the old route. T`ain`t done that way, Howard. So the CTA drivers union filed a grievance against him.

— In case you missed it, Cook County Democratic Chairman Ed Vrdolyak threw a few zingers at Mayor Harold Washington`s administration during lunch at the University Club last week. He said the mayor`s greatest accomplishment was his China trip: ”Being out of town so Gov. (Jim) Thompson could settle the school strike.” Then he told consultant Jim Lowry, the recipient of many city contracts and who was at the luncheon: ”You ought to eat the dessert that was just put in front of you. I got bad news for you. We are going to cut consulting contracts in next year`s city budget. No more free lunches!”

HOTSHOT SHORTS . . .

INC. hears that some people at WBBM-TV (Channel 2) would like to see WBBM-AM sports reporter Tom Shaer ankle over to the TV side. Shaer has broken more than his share of big sports stories in Chicago since leaving WGN radio, but INC. is told some honchos are worried that Shaer might be too much of an aggressive contrast to the easygoing Johnny Morris style. . . . Dapper Ben Green-Field, the former ”Mad Hatter” of Michigan Avenue, will model a Chinese silk outfit emblazoned with ”magnificent red tassels” at the Chicago Historical Society benefit Nov. 22. That`s the outfit he wore when he was invited for tea with Chiang Kai-shek in Peking in 1930! ”I was so

flabbergasted to meet him that I forgot a single word he said,” Green-Field told INC. ”I recall he was just a simple man.” And probably not wearing red tassels, right Ben?

INC.LINGS . . .

Timing is everything. The legislature will be out of session when House Speaker Mike Madigan (D., Chicago) becomes a daddy for the fourth time in February. . . . Psssst. A memorial benefit for Police Youth Officer Patrick Deady, one of the original members of the department`s child pornography unit, will be held at 6:30 p.m. Wednesday in Old St. Patrick`s Church hall, 718 W. Adams St. . . . A salute to musical theater in Chicago at the State of Illinois Center auditorium at 12:30 p.m. next Wednesday will feature songs sung by cast members of ”Cats,” ”Forbidden Broadway,” ”In the House of the Blues” and ”51st Ward.” And the best part: It`s free. . . . A few firsts: Marilyn Miglin has donated 1 pound of her precious Pheromone perfume to the 45th anniversary USO gala that was held in Texas. P.S. One pound costs $5,000! . . . A Wednesday birthday: the Who`s John Entwistle, 41. . . . Attention stand-up clowns! Showtime Movie Channel`s Funniest Person in America Van will be at the Daley Plaza at 11:30 a.m. Wednesday and Thursday to register novice zanies to videotape a comedy routine.