The battle of the repertory companies, just a minor skirmish last year, is beginning to assume the proportions of a full-scale engagement in the American Theatre. This week the new American Repertory Theatre entered the lists against the established Theatre Incorporated, Theater Guild Repertory, and Old Vie companies with a high-powered, grandly conceived production of the rarely performed Elizabethan chronicle. Henry VIII written partly by Shakespeare and chiefly by his contemporary John Fletcher.

With Margaret Webster at the directorial helm, the production has spared nothing in the way of costume or set, music or make-up. The result is a magnificent spectacle. Where Miss Webster and her company fail is in the equally important job of creating a unified, tasteful play for a twentieth century audience.

Opening night jitters could not have accounted for all the had timing and unblended musical effects. Lehman Engel's composition was chiefly at fault, for it not only failed to produce the distinctive Elizabethan musical flavor captured by William Walton, for example, in the cinematic Henry V, but it was in addition so poorly adapted to the play that dozens of lines were lost under the blast of a trumpet or the wheeze of the organ.

Miss Webster, who by now is an old hand at producing Shakespeare, has still not mastered the job. She has attempted to tie loose historical ends together with two speeches by a chorus-like character who informs the audience by a homespun Elizabethan intonation of what is happening. And she has aggravated the injury of the famous pre-curtain eulogy to Queen Elizabeth by humorously poor staging.

Despite these flaws, the value of the play itself shines through, chiefly by virtue of outstanding performances by Eva LeGalliene and Walter Hampden as Queen Katherine and Cardinal Wolsey. It is in the changing views of Wolsey--first the tyrannical, scheming lord of all England, then the pathetic churchman, fallen but still happy in religion--that the play has most of its strength; and Hampden got those concepts across to the audience with rare skill.

Until the company can iron out inconsistencies of music and episode, the production will have to rest on the solid foundation of the play and on the spectacularly colorful settings and costumes by David Ffolkes, which make every seene a rich and interesting portrait. If Miss Webster does make use of four weeks in Boston to prune and smooth, American Repertory will be in a strong staring position for the forthcoming sweepstakes.