IT WAS meant to be the clinching argument in favour of political reform. Conservative businessman Alfred Tso Shiu-wai's elevation to the Legislative Council on the back of only 17 votes, in last week's by-election for the Regional Council functional constituency, was widely seen as making a mockery of the electoral process. This charge was reinforced by the fact Mr Tso came bottom of the poll when he tested his popularity with ordinary voters, by standing for the New Territories West seat in the 1991 direct elections. Yet he was able to slip on to Legco through the backdoor, through what is aptly labelled as the ''most rotten of the rotten boroughs''. Coming within weeks of fellow conservative James Tien Pei-chun's unopposed election to the Federation of Hong Kong Industries seat on Legco, vacant following the death of Stephen Cheong Kam-chuen, it seemed to amount to a convincing case in favour of Governor Chris Patten's proposals to overhaul the functional constituency system. This is a card that would be valuable for Britain to have in hand as it resumes arguing with China over the issue at the ninth round of political reform negotiations in Beijing later this month. Yet, unfortunately for the Governor, the Hong Kong public thinks rather differently. As today's Sunday Morning Post opinion poll reveals, 44 per cent of those who live within Regco's New Territories ambit believe polls such as last week's by-election areperfectly fair, with only 22 per cent disagreeing and 34 per cent unsure. Those surprised by the result might be tempted to dismiss this as proof positive that rural New Territories folk are out of touch with the needs of modern-day Hong Kong. Yet that is manifestly not the case. A parallel survey of respondents throughout the territory found an even larger 49 per cent believe there is nothing wrong with 35-vote functional constituencies, like Regco's, while only 22 think they are unfair, and 29 per cent have no opinion. Nor can it be claimed the winner did not necessarily represent the voters' choice. Instead, the poll of 407 New Territories residents found that if the candidates in last week's poll had stood for direct election, it would have been a dead heat. Mr Tso and two of his defeated rivals, United Democrat Chow Yick-hay and independent David Yeung Fuk-kwong, all registered the support of 12-13 per cent of those surveyed, with fellow independent Law Kwong-wah only slightly lower on 10 per cent. However 53 per cent expressed no preference for any of the candidates. But the real sting in the tail comes in the poll finding that 47 per cent would support a Sino-British agreement on the 1995 polls which included new functional constituencies as small as the Regco one, while only 24 per cent oppose such an accord, with 29 per cent unsure. That is a far cry from Mr Patten's proposed nine new seats with electorates of at least 200,000 each, so enfranchising 2.51 million workers. Other polls have repeatedly shown large majorities for the Governor's proposals on the issue. But today's survey shows for the first time that, when confronted with the alternative, the public is willing to favour that, too. MR TSO was quick to draw the inescapable conclusion. ''People think it is necessary to keep the functional constituency system and don't want to see any arguments between China and Britain,'' he said. ''It is a good way to elect the elite into politics.' That is a blow to the British negotiating position, and its baseline that it would not be ''fair, open and acceptable to the people of Hong Kong'' - to quote the Governor's favourite phrase - to create new seats as rotten as the existing ones. Worse still, it comes as London is trying to rebuff Beijing's proposals for new seats of a similar nature, put forward during last month's talks, by arguing that Hong Kong people would never agree to them. Most Regional Councillors are, at least, elected. But it will nonetheless now be harder to argue against China's call for a seat for the kaifongs, Hong Kong's 60 district organisations, when the survey shows the public ready to acquiesce to a Regco seat with only 35 electors. Other new functional constituencies proposed by Beijing, such as textiles and garments, hotels and catering, and agriculture and fisheries, might then seem almost generous by comparison. Perhaps the only saving grace for Mr Patten is that the poll also found Mr Tso's attempt to secure an early ticket on the through-train, by consulting Xinhua (the New China News Agency) before standing for election, was disavowed by 52 per cent, with only 25 per cent in favour and 23 per cent unsure. But, that aside, the results show how precarious the Governor's position on political reform is. For, however much the public may still support his original proposals, they are clearly prepared to tolerate alternatives that he may find unpalatable, if only for the sake of avoiding further Sino-British conflicts. As previous Sunday Morning Post polls have shown, Mr Patten cannot count on public support if he chooses to break off the talks and go it alone. That means last week's election of Mr Tso, however rotten it may have seemed, is unlikely to be the last of its kind. Instead, it is far from inconceivable that there will be more such rotten boroughs in 1995.