When two North African men under investigation in an alleged terrorist plot to kill a Swedish artist appeared in the gray pillared courthouse here this week, many native Waterford residents reacted as much with puzzlement as dismay, as if Islamic extremism had no conceivable place amid the tranquillity of this quiet old harbor town. 'I think everybody is asking why should it come here; it's something that doesn't belong,' said one of the pinstriped lawyers who use the chilly courthouse lobby to caucus with clients. His face darkening with anxiety, he quickly asked that he not be named. Although Waterford has had its share of Muslim migrants in the past 15 years, many of them drawn here in pursuit of jobs during the boom, most were absorbed quickly into the local landscape, attracting little attention in a town whose busy port has always drawn its share of outsiders. Not so Ali Charaf Damache, a 44-year-old Algerian, suspected of being the ringleader of seven Muslims arrested March 9 by the Irish counterterrorism police acting in concert with the FBI. The Americans identified the suspects here during their investigation of an alleged plot to murder a Swedish artist, Lars Vilks, who drew a cartoon published in Swedish newspapers that showed the Prophet Muhammad with the body of a dog. The first arrest in the case involved a Philadelphia-area woman, Colleen R. LaRose, a Muslim convert who called herself JihadJane on the Internet. On Thursday, LaRose, 46, pleaded not guilty in Philadelphia to multiple counts of conspiring with jihadist fighters and pledging to commit murder in the name of an Islamic holy war. In Waterford, five of the seven people arrested have been released, including a second American woman who is a Muslim convert, Jamie Paulin-Ramirez, 31, of Leadville, Colo. She remains in Dublin, and FBI officials have been urging her to return to the United States for further questioning. The police in Ireland say that their inquiry in the case is continuing, and that the relatively minor charges against Damache and a 32-year-old Libyan man, Abdul Salam al-Jahani, could be broadened later to include conspiracy to commit murder. Lawyers familiar with the case say that Irish investigators have hinted at a larger plot than just the threat to kill Vilks, the artist. 'Al-Qaida has been mentioned during the questioning,' one lawyer said, asking for his identity to be withheld because of the delicacy of the case. 