By L.S. Klepp
Updated January 07, 2000 at 05:00 AM EST

Millhauser is a cross between the Peter Pan and the P.T. Barnum of contemporary American fiction. His books are like fairy tales and faintly remembered childhood dreams: They have the droll ingenuity of a waxwork diorama in an 1890s dime museum. His first novel, Edwin Mullhouse (1972), was a precise evocation of childhood as a separate country surrounded on all sides by imagination. Martin Dressler, his Pulitzer Prize-winning 1996 novel, featured a 19th-century New York City entrepreneur who constructs a labyrinthine, mirage-filled hotel in which reality is a guest that gets lost.

This new book isn’t a novel or even (as advertised) a novella. It’s more like a children’s book for adults that could have been illustrated by Millhauser’s kindred spirit Chris Van Allsburg: The characters are awakened in their Connecticut town by the spectral light of the full moon, which, in short, elliptical chapters, bewitches each of them. Many of the spells are erotically charged. A 14-year-old wanders into the night, unsure of her destination, and ends up taking off all her clothes and moonbathing in the pale, seductive light. A clandestine backyard meeting of a girl and her boyfriend results in moonstruck coupling. A troubled teen falls asleep on his lawn and the moon goddess descends into his dreams and makes love to him. A department-store mannequin comes to life and takes a moonlit walk with a lonely man.

At dawn the mannequin goes back to the window, people return to bed, and suburban normality once again conceals everyone’s enchanted inner life. But if Millhauser’s dreams can be shadowy and spooky, they don’t turn into nightmares like those of his distant literary cousins Poe and Kafka. He’s a poet not of punitive ironies but of gentle imaginative consolations. Napoleon once remarked that imagination rules mankind. Millhauser makes the same point, but his monarch is a whimsical, tolerant child-king. A-