Following a hot debate, Hollywood’s 65-year-old El Capitan Theatre was restored to its Italian baroque exterior and part-English Tudor, part-East Indian interior last month. Now there’s a new tempest swirling around the showcase venue on Hollywood Boulevard, whose restoration was paid for by Walt Disney Co. and Pacific Theaters. The Hollywood Arts Council, a 500-member, 12-year-old nonprofit organization, wants a mural of Michael Jackson, by artist Kent Twitchell, to grace the theater’s east wall. Jackson’s raised arm will reportedly be three-dimensional. Wow. But not everyone is so fond of rock’s reclusive Peter Pan. Robert Nudelman, president of the ad hoc Hollywood Project Area Committee, thinks Orson Welles, whose Citizen Kane premiered at the El Capitan in 1941, would be a better choice. Counters Oscar Arslanian, director of the council, ”This is the entertainment capital of the world, not just the film capital.” The Jackson mural has been in development for two years, though no one will say who’s paying. Nudelman speculates that the Gloved One himself is footing the bill, but Jackson’s people refuse to comment.