Magic battles magic in Bell's (Matter of Profit) winning fantasy, an inspired meditation on war, prejudice and friendship. Makenna, the 12-year-old daughter of a hedgewitch who has been drowned for using outlawed magic, learns that it is sometimes necessary to fight in order to maintain balance in the Realm-Beyond-the-Bright-Gods. When the Hierarch decides that all power not stemming from the Seven Bright Ones must be coming from the Dark One, he issues the Decree of Bright Magic, ordering that hedgewitches, seers and their ilk be slain or turned over to the church. In response, Makenna joins forces with goblins. With a light touch reminiscent of Jane Yolen or Patricia McKillup, Bell rehabilitates the goblin from its traditionally fearful reputation (as in, for example, Christina Rossetti's "Goblin Market"). By presenting goblins as just another race trying to survive, the author illuminates the sometimes spider-thin lines that prevent cultures from living together in peace. The fast-moving plot weaves in a romance, too. Tobin, a dishonored knight attempting to prove himself anew, seeks to capture Makenna, whom he believes to be a sorceress; he ends up falling in love with her. Genre fans will relish the combination of a resourceful, determined heroine, densely packed action and thought-provoking themes. Ages 10-up. (Apr.)