COTE FEAR

It's spring, and any movie mogul worth his PowerBook is at the Cannes film festival. Thousands of industry folk have invaded the Cote d'Azur for 10 days of business, pleasure, and insider buzz. Some opening- weekend observations: *Most inflated promotion: At the Last Action Hero party, Arnold Schwarzenegger proclaimed, ''This picture is huge, it's large, it's gigantic.'' Meanwhile, in the city's harbor, Columbia Pictures struggled to keep its Arnold balloon- looking dingy after its recent stint in Times Square-from deflating. *Most surprising contender: Miramax's The Piano, a gothic romance directed by Jane Campion (An Angel at My Table) and starring Holly Hunter. If Campion takes the top prize, the Palme d'Or, it would be the first time for a female director. *Most insightful quip: Asked if he was prepping a sequel to his film-biz satire The Player, director Robert Altman replied, ''Aren't we in it?''