(Official correction after Russian news agency says it wrongly named one athlete in original report, paragraph 20)

* Torch tours quake-hit zone before leaving for Beijing

* Security intensified after attack on police in west

* Gay says will be fit for 100 metres race

* Bush gives mixed appraisal of China en route to Games

By Lindsay Beck

CHENGDU, China, Aug 5 (Reuters) - Crowds wildly cheered the parading of the Olympic flame through China's quake-ravaged southwest on Tuesday, as Beijing tries to choreograph a happy ending to its troubled international tour.

But far to the northwest, questions about dissent and China's human rights record refused to go away, a day after suspected Islamist separatists killed 16 policemen in what a senior local Communist Party official called a "terrorist attack".

Riot police flooded the streets in the old Silk Road city of Kashgar and stopped cars. Exiled dissident groups said many local Muslims had been rounded up, and some beaten. Japan protested after police also beat up two of its journalists there.

The government and Olympics chiefs shrugged off the attack, assuring the 10,500 athletes from 205 countries that security was guaranteed and promising an inspiring Games.

The International Olympic Committee (IOC) also tried to reassure visitors and athletes that the smog which often envelops the capital would not pose "major" health problems.

But not everyone is convinced. Members of the U.S. cycling squad arrived at Beijing's swanky new airport terminal on Tuesday wearing black respiratory masks.

The Olympic torch arrives in the capital on Tuesday night for the last leg of its 130-day tour, which became a lightning rod for pro-Tibet protesters. Police warned Beijing residents they would face sweeping security checks to prevent more trouble.

In a tradition introduced before the 1936 Berlin Olympics, the flame is lit from the sun's rays in ancient Olympia, Greece, then carried across the globe by thousands of runners.

"This is the pride of the Chinese people," worker Xu Min said amid cheering crowds watching the flame in Chengdu, capital of the quake-hit Sichuan province where at least 70,000 people died in May.

Once in Beijing the torch will leave from the Forbidden City, former home to the emperors, before touring city landmarks including the vast Tiananmen Square and reaching the main Bird's Nest stadium for Friday's opening ceremony.

Music and singing floated into the air overnight from the gleaming, steel-latticed venue as thousands prepared for the extravaganza timed for eight o'clock on the eighth day of the eighth month: the number symbolises fortune in China.

With thousands of athletes now in China and limbering up for the Aug. 8-24 event, local and Olympic authorities hoped global attention would finally turn to sport after a buildup dominated by debate over Beijing's policies at home and abroad.

Desperate to show its modern face to the world but under pressure over human rights, the host nation was shaken by Monday's attack some 5,000 km (3,000 miles) west of Beijing.

"This is an individual incident," Chinese tourism official Du Jiang said. "We are basically a safe travel destination."

Two men were arrested on the spot for carrying out the attack, police said, identifying them as a taxi driver and a vegetable seller, both Muslim ethnic Uighurs.

Officials said they had found material on the men promoting "jihad", and also arrested 18 "foreign agitators" in the Xinjiang region, although they were linked to previous unrest.

RUSSIANS EJECTED AFTER EARLIER DOPE TESTS

The Olympics will cost Beijing about $40 billion, by far the most expensive in history. Unlike past debt-ridden hosts such as Montreal in 1976 and Athens in 2004, that sum is small change for China's roaring economy.

In the most eagerly-awaited competition, the men's 100 metres for the title of Fastest Man on Earth, world champion Tyson Gay said he would be ready despite a hamstring muscle strain in July.

But in the latest in a string of doping scandals to hit the Games, two Russian Olympic walkers were ejected from the team for Beijing after failing tests.

Former world record holder Vladimir Kanaikin and Viktor Burayev tested positive for the banned drug EPO in out-of-competition tests in April, their coach Viktor Chegin told the local news agency All Sport, bringing to around 20 the number of athletes ejected over doping.

The sun made a welcome appearance on Tuesday afternoon as a light breeze dispersed the pollution-fuelled haze that had earlier obscured a skyline boasting numerous futuristic new Olympic venues and towers bearing testimony to China's new wealth.

Authorities have spent a fortune -- around $18 billion -- on cleaning up Beijing. Drastic measures have included taking nearly 2 million cars off the street and shutting factories. But they can do little about the cloying summer heat.

"The humidity's quite fun. It's like rowing through a steam bath," British competitor Olivia Whitlam said at the rowing lake.

In a bid to show openness, police have been told not to interfere with foreign journalists' coverage or with anti-government speeches, even if it tackles the banned spiritualist movement Falun Gong, independence for Taiwan, Tibet or Xinjiang.

En route to Asia, U.S. President George W. Bush gave a mixed assessment of a nation many expect to rival his own for global hegemony this century.

He praised China's efforts to curb the nuclear ambitions of North Korea and Iran, but it said it was "really hard to tell" whether human rights had improved of late. (Additional reporting by Gene Cherry, Ben Blanchard, Paul Majendie, Kate Holton, Lucy Hornby, Julian Linden, Simon Rabinovitch and Emma Graham-Harrison; Writing by Simon Denyer; Editing by Nick Macfie) (For more stories visit our multimedia website "Road to Beijing" at http://www.reuters.com/news/sports/2008olympics; and see our blog at http://blogs.reuters.com/china)

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