OLYMPIC NOTEBOOK: RAYMOND LOSES HER ROSTER BID.

Byline: Daily News Staff and Wire services

Lisa Raymond's bid for an Olympic tennis berth fell short Wednesday as an arbitrator ruled the U.S. Tennis Association mishandled its selection process but upheld its selections.

Arbitrator Richard Jeydel ruled in New York that the USTA was in ``flagrant violation'' of United States Olympic Committee rules regarding the way the USTA selected Serena Williams to play doubles instead of Raymond, the world's top-ranked doubles player.

``You don't fight your butt off to become the No. 1 doubles player in the world and don't get chosen to go the Olympic Games. How that's not good enough - you tell me,'' Raymond said.

Jeydel also said the USTA failed to to follow its past tradition of naming the top-ranked doubles player to the Olympic team, and incorrectly told coach Billie Jean King she could use discretion to pick the team.

King and the USTA followed their procedures and named the four highest-ranking American singles players to the Olympic team. Jeydel said that was proper, so Williams remains on the team, along with Lindsay Davenport, Monica Seles and Venus Williams.

``We put a lot of information in his hand to decide, and he chose not to upset the apple cart,'' said Raymond's lawyer, Greg Becker. ``We went in and proved violation after violation. We had a good case, but it's a lot to ask someone to make the right choice.''

USTA executive director Rick Ferman released a statement, saying in part, ``We regret any misinformation that may have led to confusion.''

- Lee Barnathan

--Aborigine flag OK'd: The Australian Olympic Committee has said it will not penalize athletes for displaying the Aboriginal flag at the Sydney Games, a move in stark contrast to policies of the past.

Indigenous leaders applauded the decision, which gives official sanction to Aboriginal athletes such as 400-meter favorite Cathy Freeman to carry the red, yellow and black flag during a victory lap.

--'Priscilla' returns: Drag queens will be part of the Sydney 2000 Olympic Games' finale regardless of what ``right-wing reactionaries'' think, according to ceremonies director Ric Birch.

Several men dressed in outlandish dresses, wigs and makeup, will be ``part of one tiny section'' of the closing ceremony, a tribute to Australian films including the 1994 cult hit ``The Adventures of Priscilla, Queen of the Desert,'' he said.

A report in Wednesday's Sydney Morning Herald newspaper sparked heated debate on radio shows. One caller said he would trade his closing ceremony ticket after hearing the news.

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Photo: Timothy Sharman holds the Olympic flame after arriving in Cape Byron, located in the easternmost point of Australia, on Wednesday.

Greg Garay/Associated Press