For language lovers, a monthly that keeps abreast of uses and abuses

Can you spell the word that's pronounced shell-lay-lee (a cudgel named for an Irish town)?*

* shillelagh

What are the two letters that don't appear on a phone dial?**

** Q and Z

What do ''bittersweet,'' ''cruel kindness,'' and ''cold hot dogs'' have in common?***

*** all are examples of the oxymoron, a figure of speech pairing two contradictory words for a literary effect.

Language puzzles like these, and more words to the wise intrigue and delight 500 readers of a monthly newsletter called Word Watching, published by the American College of Bryn Mawr, Pa. Since 1977, Kay Powell, editorial director of the college, has been writing Word Watching as a ''sort of gift'' to her colleagues.

Originally intended for faculty and staff of the college, which teaches 60, 000 students from the United States and abroad mostly through independent study, Word Watching has broadened its coverage to include lots of outside readers. Edwin Newman is among the newsletter's fans.

Mrs. Powell often pokes fun at academic jargon in Word Watching. In August 1980 she wrote of a certain Dr. Fox, who presented a well-received paper on the use of computers in medical science at three medical conferences; ''Dr. Fox'' was then revealed to be an actor who had read, not a scientific paper, but a script carefully written to be meaningless and self-contradictory. It was a project of the Wharton School illustrating the kind of bewildering gibberish that some academics use when prestige, not communication, is the goal.

But Powell doesn't dwell on dreadful examples. Quickly she switches to language one-liners: the subway-wall graffiti, which reads, ''Dwn wth vwls,'' the teacher on a picket line with a sign ''On strike for a descent wage,'' and the Eskimo prayer, ''Give us this day our daily fish.''

The newsletter is always informative, often hilarious. Each issue features grammar and usage rules topped with a fluff of puzzles and educational tidbits, written in a breezy, informal style that amuses while it teaches. Powell's nonacademic tone appeals to everyone from ''mail-room clerk to college president ,'' she says.

Word Watching is anecdotal, too. Recently there was an item about a fellow in North Carolina who sought to give his kids a jump over their peers with common names like Sally and Jim. This papa named his girls Louisiana Maryland, Virginia Carolina, and Georgia Indiana; the boys, Vermont Connecticut, Iowa Michigan, Arkansas Delaware, Wisconsin Illinois, and Oregon Minnesota. One of these sibs had a grandson named for him who became an editor, a two-time Pulitzer Prize-winner, and a well-known author. But today, Vermont Connecticut Royster, in spite of his impressive handle and his prestigious position, is known to his associates as Roy.

Some of Powell's items are controversial, but her sources include a wide range of newspapers, magazines, and reference books, and she hasn't had to retract anything yet.

In March 1981 she related that the Japanese word mokusatsu, which means ''withhold comment'' as well as ''ignore,'' was used in a July 1945 Japanese reply to an Allied message requesting that Japan surrender. The Japanese Cabinet used the word to mean ''no comment till we have a chance to think about it,'' according to Powell's sources. But the word was translated ''ignore,'' implying that Japan was prepared to fight indefinitely. The Americans were convinced of Japanese intransigence and dropped the atom bomb. Two hundred thirty thousand casualties paid for a word error.

Two of Powell's devoted readers are Malcolm Baldridge, Secretary of Commerce, and Warren Phillips, chief executive of Dow Jones & Co. McGraw-Hill and Scott-Foresman editors read her.

People in Norway and England subscribe. Libraries, including the Ford Foundation Library and the Harvard University library, find Word Watching popular with their clientele.

Powell's working day at American College is spent supervising seven editors, who correct and revise textbooks and study guides designed by the faculty for students. She researches and writes the newsletter on her own time.

''Wimpy'' language, verbs that don't sparkle, misuse of words - all fall before Powell's good-humored attacks. In the April 1983 issue, she fulminated that ''real writers don't just eat quiche, they snack on it, devour it, dispatch it, feed on it, ingest it, consume it, gobble it, bolt it, wolf it down, pick at it, feast on it, stuff themselves with it, nibble at it, chew it, gulp it down, and polish it off.''

That's a favorite item of her younger readers, as is this anecdote from April 1984, which illustrates that the more things change, the more they stay the same.

When a psychologist surveyed college students to discover the best opening line to the opposite sex, the top ranking were ''I feel a little embarrassed about this, but I'd like to meet you.'' ''Do you want to dance?'' ''That's a very nice (dress/suit/etc.) you have on.'' ''Can I buy you lunch?'' But the winner, Word Watching says, the very best opener, according to the undergrads, is that old one-word greeting, ''Hi.''