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John Mellencamp built his music career on a love of small towns, so it`s not surprising that his first venture into movies, ”Falling From Grace,” is about small-town life.

What is surprising is that Columbia Pictures plans to release the film, scripted 10 years ago by novelist Larry McMurtry, in only a handful of cities, not including Chicago. Columbia would not comment on its decision, but such a blatant vote of no confidence by a distributor usually signals a picture that is all but unwatchable.

So it was a curious and skeptical band of young advertising types, invited through a promotion for Spin magazine, which gathered Tuesday night in the upper reaches of the Esquire Theater for cocktails and what may turn out to be Chicago`s only screening of this movie. What they saw was no ”Last Picture Show” (which McMurtry also wrote), but it was not an embarrassment, either. It was an interesting story about a big country music star, Bud Parks, who returns with his wife and daughter to his Indiana hometown, where he thinks he can be himself, only to learn that his true self is the one he invented in New York, Nashville and Hollywood.

The town is filled with patented McMurtry touches. A pair of crusty, skirt-chasing codgers (Bud`s father and grandfather) and a smart seductress

(B.J., Bud`s sister-in-law and former girlfriend, who is having an affair with his father) quickly and neatly define an environment so monotonous that it encourages trouble. It is a world in which women and men are alienated and where estrogen and testosterone might as well be oil and water.

Mellencamp seems at home starring in this movie, and well he should. Not only does the plot borrow a few pages from his life, it was shot in Seymour, Ind., the blue-collar town of about 12,000 souls where he was born and grew up. (He now lives in nearby Bloomington.) As the film`s director, he can amble through the scenes at a comfortable pace that turns out to be well-suited to the soul-searching dialogue.

To be sure, he has some fine acting support. Claude Akins, a.k.a. beloved Sheriff Lobo, is spectacularly nasty as Speck, Bud`s mean, lecherous father. And Mariel Hemingway, as Bud`s loyal wife, manages to make virtue interesting. But it is Kay Lenz`s B.J. who puts the sizzle in Mellencamp`s stake in the movies. She elicits sympathy for a character who, in many other hands, would be merely appalling.

As a director, Mellencamp is sometimes awkward with camera placement, but he seems to have a genuine affection for his characters that translates to good performances. Mellencamp and McMurtry occasionally do lay the manure kicking on a bit thick.

”Falling From Grace” is backed by a comfortable soundtrack featuring such diverse artists as John Prine and Dwight Yoakum. But the most memorable refrain is the one Mellencamp irrepressibly delivers several times in the movie-”I`ve got the hu-u-u-ngries for your love, and I`m standin` in your welfare line”-a great country lyric that sums up the situation at hand.