1988

''People think Steve, doing wild comedy, is out of control,'' says Frank Oz about Steve Martin, who co-stars with Michael Caine in ''Dirty Rotten Scoundrels.''

''He's never out of control,'' continues the director, whose newly opened film is being praised for its rare combination of gut hilarity and sophisticated snap. ''Steve understands comic logic and structure. It's not just, 'Let's have fun.' He's always thinking about the character and keeping it funny within the context of the script.''

Mr. Oz, whose film deals with two confidence men with markedly different styles, says that he's inclined to walk out of movies like ''Police Academy.'' ''Some of the comedy these days is one-note. There's no texture. I instinctively tend to do material that is stylish or elegant in some way.'' The virtue of ''Scoundrels,'' he thinks, is ''the restraint in handling the comedy. No one tried to be funny. Everything came out of the characters.'' The characters in question are Lawrence Jamieson, played by Michael Caine, an ineffably Continental shyster whose prey of choice is the jeweled, Midwestern widow, and Freddy Benson, played by Mr. Martin, a wrinkle-trousered sleaze who inspires women to pick up the tab in pricey restaurants. In the course of the movie, they compete for the same rich Riviera turf and its moneyed female visitors.

''What I liked about the script'' - one based on the 1964 film, ''Bedtime Story,'' which starred Marlon Brando and David Niven - ''was that the actual words weren't so important,'' says the director. ''I saw an opportunity for the actors to have juice between the lines. The structure was good; the relationships and the characters' expectations were clear, so there was room for a lot of fun when we got to the floor, the pit, the actual cooking moment.''

Steve Martin (who played a Presley-like, sadistic dentist in Mr. Oz's last film, ''Little Shop of Horrors'') was, says the director, an important contributor to the comic style of ''Dirty Rotten Scoundrels.'' He credits the actor with an ingenious touch in a scene in which Freddy Benson, feigning paraplegia, must go down a great number of steps in his wheelchair. Mr. Oz also admires Mr. Martin's ability to swing between ''high wit and low buffoonery,'' as in his portrayal of the cretinous Prince Ruprecht (''brother'' to the deposed monarch, one of Mr. Caine's guises). ''Steve said, 'You know, Frank, we're doing Jerry' '' - meaning Jerry Lewis - ''and I said, 'I know it.' ''

''There were definitely a couple of Lewis looks in there,'' says Mr. Martin. ''I hope that influences like that get into your body and are translated by your own personality.''

Mr. Martin also chose the eventual title of ''Dirty Rotten Scoundrels,'' one of a fecund burst delivered in phone call after phone call to the director. ''The movie's always on his mind,'' says Mr. Oz. ''As a performer, Steve will sit in his trailer between takes, thinking about his part. He's prepared to work until he drops to get something better.''

Michael Caine, on the other hand, is able to convey his ''subtle comic awareness'' in a different way. ''After one take, he says, 'Take it; I like it.' He will do more, if asked, but his modus operandi is that he does his best in the first or second take. And he's usually right.''

''I have a low boredom threshold,'' says Mr. Caine. ''I put my heart and soul into the very first take. I don't have to work up to it; I'm already there.'' Mr. Oz says his initial apprehensions about Mr. Caine's comic taste were dispelled in an early conversation in the actor's home in the Oxfordshire countryside. ''Michael said he wanted to be real, naturalistic; and I breathed a huge sigh of relief. I hate people trying hard to be funny. But then he said, 'By the way, I do a great German accent,' - another of Lawrence Jamieson's impersonations is a psychoanalyst - ''and I said, 'Gee, Michael, I really don't know.' I thought he might do it in a shticky way. So he said, 'Come here, I'll audition for you. Steve and I went into his den. That accent was placed so subtly. ''Michael astounds me in his range. I think he's underestimated because he's done a lot of work, which is bizarre, because working just hones the equipment better.''

Another artist who might be underestimated is Frank Oz himself, who has worked with Jim Henson and the Muppets since the age of 19. Mr. Oz created, and still performs as, the characters of Miss Piggy, the Cookie Monster, Grover and Bert (of Bert and Ernie) to name a sampling; his jaunty first film was ''The Muppets Take Manhattan.'' Though proud of his work, the director says that ''the down side of doing this is that people attach a sense of decency and likability to me that is inhuman. It stunts growth. People see a Frank Oz film and expect something warm and wonderful.

''None of it is real,'' says the director, who has long grown weary of inevitable puns about his name (his legal name is still Oznowicz). ''Con men working in the South of France is not real at all. In real life, they'd just steal the money. There is no honor among thieves. Style had to come in to support the comic's concept.

''I put a sheen on 'Muppets Take Manhattan,' and I put a different sort of sheen on 'Dirty Rotten Scoundrels.' '' Mr. Oz did not show, for instance, the seedier parts of the Riviera, which are abundant. ''It's like Woody Allen's 'Manhattan,' '' says the director, referring to Mr. Allen's nostalgic, Gershwin-flavored valentine to the city. ''When you really walk down the streets of Manhattan, you know it ain't the Woody Allen movie.

''On the other hand, if I were to do a terribly dark movie, where the emotions of the characters rolled around in the mud, I would want to shoot all the ugly stuff, and have it gritty and powerful in that way,'' says Mr. Oz, who, while influenced by Noel Coward and Preston Sturges, also admires Pinter, Beckett and David Lynch's film ''Blue Velvet.''

''I'm interested in the creation of a world,'' concludes Mr. Oz, whose ''Little Shop of Horrors'' featured the Faustian bargain of a meek florist and a bloodthirsty plant, the latter a Muppet-like creature of horrible proportions and appetite.

''People have always condescended to the Muppets, and they shouldn't,'' he says. ''They're not puppets to me. To me, what they are are characters. And that's what it's always about.''