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HEADS by Edward Stewart. 224 pages. Macmillan. $4.95.

Edward Stewart's characters are so folded, spindled and mutilated that the mind's computer tends to reject them as not altogether human. Yet they have a way of engaging the reader with their perverse antics and comic, but horrific, deeds. Stewart's first novel, Orpheus on Top, marked him as a humorist of darkest hue. In this, his second, he has created an "entertainment" worthy of France's Grand Guignol theater.

Centered around graduates of venerable Eli College (Oxford, Mass.), the story concerns people who, when they become head of their department or organization, have their heads and other parts of their bodies lopped off by a devious ax murderer--or murderers. On the squash court of New York's Eli Club, Professor Bertram Langsam loses his head and thumb. Ferdinand Fields, an Episcopal rector partial to horror flicks, is decapitated in the men's room of a Long Island railroad train by a Peruvian sun priestess turned tramp. Whittaker Duchamp, bogus play producer, is more fortunate: he only loses an ear. The bloody trail is also strewn with a vengeful rabbi, scheming and pathetic women, a semi-transvestite, and other odd characters who are for the most part linked to old Eli.

As the plot ravels, the author spoofs a variety of human miseries, including college musicals, graduate clubs, the New York Police Department, love, marriage and funerals. These grotesqueries are achieved with a satiric style that matches the droll gazelles of Stewart's imagination. However, far from merely a formless pastiche of perverse events, Stewart has actually created an absurd murder mystery with a strong narrative structure. The clues, leading back to a 20-year-old college musical production and a war refugee organization, are pursued by two bumbling characters who keep the story full of suspense right up to the final flourish of axes.

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