Somewhere in the middle of the fabulous "Avenue Q," the sleeper summer musical that's attracting large and unusually youthful audiences to Broadway, two characters have a passionate, if ill-advised, sexual encounter.We're in one of those lonely outer-borough New York neighborhoods where affordable rents attract both the striving and the terminally washed-up. A well-meaning, fresh-out-of-college fellow named Princeton hooks up with his neighbor; a sad, nerdy kindergarten teacher's aide named Kate.

Kate hasn't had a boyfriend in ages -- if ever. Princeton has come out swinging -- not knowing that a slutty siren named Lucy soon will use and abuse him, and that the cynical city is about to stomp all over his naive exuberance

One thing leads to another with sweet Kate and Princeton. And before long, limbs are entangled, faces are flushed and their hearts are on the line.

Those unusually flexible limbs, though, are made of felt. And Princeton's passionate, pre-coital appearance has a lot to do with the fact that his face is perpetually bright orange.

And Kate? Her appearance suggests a parentage that includes the Cookie Monster.

The most obvious influence of this highly distinctive puppets-and-people musical is "Sesame Street" -- Rick Lyon's puppets are very much in that pallet. And most of the remarkably talented cast honed their craft (as did Lyon) on that especially empathetic children's TV show, where humans interact with the animated inanimate creatures much as they do this summer on the stage of the Golden Theatre.

One suspects that the people behind this show (which is not authorized by the late Jim Henson's company and assiduously avoids brand names) found its adult content creatively freeing. For obvious reasons, "Sesame Street" generally avoids R-rated bedroom scenes. And when an audience's childhood memories and adult interests collide, the reaction is highly intense.

But even though it's set in front of a bunch of urban stoops and has a subplot involving the Monsters' struggle for legitimacy in a racist world, "Avenue Q" actually is a great deal more than a silly satire that allows children reared on "Sesame Street" to poke some adult, urban fun at their genial electronic substitute parent.

This is no "Spitting Image." Not only have the young creators, Robert Lopez and Jeff Marx, created a remarkably tuneful new pop musical replete with witty and deliciously understated lyrics, they've also taken great care to draw their viewers into their character's emotional dilemmas. Thanks in part to three omnidexterous performances (part manipulations, part acting, all creative acts) from Lyon, Stephanie D'Abruzzo and John Tartaglia, the tawdry life of, say, Trekkie Monster, is positively heart-wrenching.

Kate and Princeton are the kind of odd urban couple one might meet on "The Real World," or on the pages of Armistead Maupin's "Tales of the City" or maybe even on "Friends." And on Avenue Q -- really another version of Maupin's Barbary Lane or the East Village of "Rent" -- they live among other familiar archetypes. There's an unemployed, thirtysomething caterer with broken dreams of being a professional comic (played by Jordan Gelber, a human). His big, hysterical number is called "It Sucks to Be Me." There are a couple of good-spirited roommates who may or may not be gay. There's a Japanese-American (Ann Harada) who has to deal with racist attitudes. And there's a local scary wacko who spends too much time on dodgy Internet sites.

By the end of the night, the audience is deeply involved with the cloth-eyed denizens of this hood and their human neighbors.

There's only one flaw. The building superintendent is Gary Coleman (yes, that Gary Coleman). Played by Natalie Venetia Belcon, this non-puppet character allows for a lot of easy gags at the expense of washed-up child stars. But the target is too easy to be that consistently funny. And in an otherwise fictional world, the introduction of a real celebrity (and, now, gubernatorial candidate) is jarring.

But remarkably, Coleman is the least believable character on the stage.

And that's testament to the overall wit, quality and craft behind "Avenue Q," a feast of wit, invention and dazzling lyrical skill that began life at the Vineyard Theatre and looks set for a long stay on Broadway. It taps into the slacker zeitgeist, allows for a little nostalgic regression, embodies edginess, and preaches warm, fuzzy acceptance and compassion. And the songs are great. Talk about a hit show.


"Avenue Q" is playing at the Golden Theatre, 252 W. 45th St., New York. For more information, call 212-239-6200.