Within the vast body of WW II literature, only a few volumes examine the five-year German occupation of Britain's Channel Islands. The seemingly peaceful takeover has long been viewed as a historical curio; it was the only incidence in which British territory fell under Nazi rule. Bunting, a reporter for Britain's Guardian newspaper, takes a sociologist's view of the episode, examining the Nazi occupation of the Channel Islands as an indicator of how a small, closed community coped with the trauma of a forced takeover. Relying on previously untapped archives in the Channel Islands and Moscow, plus other sources, she has produced a captivating study of life during the ""model occupation."" On the surface, the islanders' behavior toward the Nazis was shocking. Unlike most citizens in other occupied lands, residents of the Channel Islands acquiesced to German rule, to the point of helping to round up local Jews. But Bunting shows that there were strong pockets of defiance and allows the islanders to make the case that in their isolated location, they cooperated for the sake of survival. The author, who took as her research motto, ""There but for the grace of God go I,"" clearly has taken pains to present truth. She has produced a model study. Photographs; maps. (June)