Plenty of eyebrows are being raised over San Francisco District Attorney Terence Hallinan's decision to allow -- even encourage -- his prosecutors to give alleged Fajitagate victim Jade Santoro a break on a drug bust conviction.

Critics say the D.A. was trying to bolster the credibility of the 25-year- old Santoro, who had already agreed to plead guilty to a felony marijuana charge but now is in position to have that reduced to a misdemeanor in a year.

Santoro is expected to be on the stand in any assault trial against the two officers and one ex-officer -- Alex Fagan Jr. -- accused of beating up Santoro and a friend on Union Street in a fight that started over steak fajitas. And Hallinan's critics point out that a felony rap would look bad on the star witness' resume.

Hallinan's office says all those rumblings are bunk. Prosecutors say the plea was just a matter of fairness, since a co-defendant got a similar deal.

But Golden Gate University Law School Dean Peter Keane, himself a former assistant public defender, called the plea switch highly unusual.

"I've never heard of it in my 35 years of practicing law -- it never happens," Keane said. "When I heard about it, I was rocked by it."

Fueling suspicions was Hallinan's decision to simultaneously transfer -- some say demote -- Ray Fong, the veteran deputy D.A. who had been assigned to Santoro's prosecution and had him being saddled with a felony.

Hallinan's office called the transfer routine, saying Fong was among 19 deputies shuffled in a recent round of transfers.

Others say it's reminiscent of the cops' decision to transfer Lt. Joe Dutto off the Fajitagate case -- a move that led to some of the police brass being briefly indicted on charges of conspiring to obstruct justice.

Fong, who is off work attending to a family emergency, has been unavailable for comment. But those who have spoken to him smell a rat.

It all goes back to October -- more than a month before the Union Street incident -- when Santoro and two other men were busted with 20 pounds of marijuana and more than $460,000 in cash.

Santoro was caught tossing bricks of the weed out the window.

In April, Santoro pleaded guilty to a single felony count of possessing marijuana for sale.

Sources say it was Hallinan himself who set the lesser plea in motion at a recent D.A. candidates forum at the Italian Athletic Club when he ran across Eric Safire, the attorney representing the other alleged Fajitagate victim, Adam Snyder, in their civil suit against the cops.

Hallinan, our source says, told Safire he "didn't think it was fair (Santoro) was taking the hit" on the drug case and that "there was room for negotiation."

The next thing you know, Santoro was dumping his attorney and hiring a new one. On Monday the two showed up in court, where Santoro withdrew his original felony plea and instead pleaded to a substitute felony charge -- known as a "wobbler" -- that can be reduced to a misdemeanor after a year.

"Saddling him with a felony for the rest of his life would not be a very fair thing to do," said Santoro's attorney, Michael Thorman.

Maybe, but you can bet the Fajitagate cops' attorneys will make an issue of this latest twist if the case comes to trial -- just as they plan to bring up Santoro's high alcohol level the night of the assault and the fact that a small amount of cocaine was found on him when he was taken to the hospital.

"You may just wave goodbye to the prosecution of the three cops entirely," legal expert Keane said of the possible consequences of Hallinan's plea switch.

"Jurors will see that this witness has a tremendous bias in giving testimony for the prosecution because of this extraordinary reward he's gotten, " Keane said.

BEHIND THE COUNT: All eyes will be on the California secretary of state's office today for the big recall count -- but the real plays are going well behind the scenes.

The biggest question, of course, is whether Arnold Schwarzenegger -- who just got back from a European promo tour -- will make this the biggest story of the year by jumping into the fray.

And now that the clock is ticking, the time for playing cute is rapidly coming to an end.

"Everything is set up to go if he says 'yes,' but it's do-it-or-get-off-the- pot time," admitted one source close to the Terminator. "My expectation is that he's talking it over with his wife right now."

One of the keys in all this will be the final round of words between Schwarzenegger and former Los Angeles Mayor Richard Riordan -- who is being urged to run by more liberal Republicans.

"The bottom line," our source told us, "is if Arnold goes, Dick won't. If Arnold doesn't do it, then it's highly likely Dick will -- it's between the two of them to hash out."

From what we've hear, the Republican hierarchy -- especially those close to former Gov. Pete Wilson -- would favor Schwarzenegger. At least that's the word that came out of the Bohemian Grove this past weekend, where a number of state and national GOPers, including presidential adviser Karl Rove, happened to have gathered at a club getaway.

None of this would be good news for Gov. Gray Davis -- who hopes his opponents will be limited to conservatives like Bill Simon or San Diego-area Rep. Darrell Issa.

"There's no question Riordan would be the biggest problem of them all," said one Davis operative. "He's the most liberal, he has a strong name ID in Southern California and you can't pin him as a right-winger -- which is the whole key to the Davis strategy."