Banking that auds will take to more radical fare like the upcoming AIDS epic “And the Band Played On,” HBO Pictures Thursday announced the pickup of Randy Shilts’ latest non-fiction work, “Conduct Unbecoming,” about gays in the U.S. military.

So far, no helmer or talent have been set.

Oliver Stone’s Ixtlan Prods. and Steve Golin/Sigurjon Sighvatsson’s Propaganda Films will produce the story, which focuses on the “Draconian measures the government employs to kick out gays,” according to Shilts, whose book remains on the New York Times bestseller list.

“It is a bigger challenge to adapt than ‘Band,’ ” Shilts said. “Because it spans (23 years), very few people will be there throughout the whole film. You have to pick a time period.”

Shilts said most government “purges” of gay servicemen and women have taken place in the last five years, and that President Clinton’s recent compromise position of “don’t ask, don’t tell” will not change anything.

Shilts, who is repped by Ron Gersh of the Gersh Agency, will be attached to the pic as a consultant. Shilts said HBO was “an obvious place” for the project, because “the networks are terrified of doing anything about gays.”

But HBO Pix, which hammered out the deal with Stone about six weeks ago, says there has been no traceable fear of an audience backlash to this type of project.

“I think the word mainstream is a question of perception,” said Robert Cooper , senior VP of HBO Pictures. “This is no more of a gamble than ‘Band,’ which I actually believe is a mainstream film… The day before ‘Barbarians at the Gate’ opened, very few people believed in it.”

The James Garner pic about spendthrift Wall Street moguls grabbed a 14.1 rating/22 share when it preemed this spring, beating out the webs in HBO households.

“Our mandate is to look at things others have ignored,” Cooper said. “We believe that there are huge audiences for movies that do not on their face seem obvious … When we send something out on cable, people need something they don’t get on other networks.”

“Conduct” is Shilts’ second endeavor with Stone, who is in development on the WB adaptation of Shilts’ “The Mayor of Castro Street,” chronicling the life and death of assassinated gay rights activist Harvey Milk.

The military pic, which starts in 1967 Vietnam and follows gay GIs through the outbreak of the Gulf War in 1990, will be co-produced with Ixtlan’s Janet Yang, who is also attached to “Mayor.”

Despite longtime reported difficulties in casting pix with gay themes, including open criticism of studio fears by several leading men, Yang feels no such institutional resistance in Hollywood.

“Our Harvey Milk project has generated tremendous interest,” she said. “So I don’t know from personal experience that it’s hard to cast gay roles.” Recently, gay director Gus Van Sant (“My Own Private Idaho”) ankled the Milk pic after reported creative disputes with Stone. Robin Williams is still first pick to star as the San Francisco supervisor.

Though no thesp names have been tossed around for “Conduct,” Yang said that “we’d like to get recognizable names … (Shilts) has chronicled a very important, and not well-known, part of America.” She said the search for a scripter, helmer and location will start soon.

No budget has been set, either, though sources predict it to fall within range of “Band,” which reportedly lensed for $ 8 million, and the $ 10 million “The Josephine Baker Story.”