Along the colonial-era stone streets where striking teachers paralyzed this city nearly a year ago - declaring themselves the acting government - there are now weddings, foot races and outdoor markets.

The shady plaza that served as a shanty-town headquarters for a seven-month insurrection is now a place where musicians strum guitars, children chase balloons and couples steal private moments.

And just as this beloved colonial city is getting back on its feet, there is concern it could again plunge into disorder.

The 60,000-strong teachers union marched through the city Tuesday as part of International Labor Day observances.

Trouble started last May and intensified in June after state police violently challenged the teachers during their annual - and usually routine - summertime demonstrations.

The teachers fought back, drove away the officers and occupied the town square, soon reinforced by a coalition of left-leaning community groups, which became known by its acronym, APPO.

They set up tents, spray-painted stone buildings with revolutionary graffiti and used everything from garbage to burning cars and buses to block streets and fortify the city´s Historic Center.

At nightly road blockades, activists wearing masks, holding clubs and standing beside fires controlled who came and went.

Demonstrators wouldn´t allow government employees to work and at one point hog-tied a policeman, splattered him with paint and made him march through the downtown holding a portrait of the state governor, whose ouster they demanded.

Oaxaca City was filthy and barely recognizable. Tourism plummeted, leaving hotels and restaurants nearly vacant. The city lost an estimated US$800 million in revenue, according to the hotel association.

RIOT POLICE SENT IN

Things came to a head in late October with the shooting death of U.S. journalist-activist Bradley Will, one of about 20 people human rights groups say were killed in violence related to demonstrations here and in outlying areas.

After Will´s death, then-President Vicente Fox ended a hands-off policy and sent in federal riot police to dismantle the barricades. The movement had exacerbated an already divisive presidential campaign, was threatening to spread to other cities and was giving Mexico a bad image on the world stage.

Many people, including residents who said they´d become hostages in their own city, thought Fox waited too long to act.

In black body armor and supported by water cannons behind bulldozer blades, thousands of officers retook Oaxaca City with relative restraint and precision.

As Oaxaca City cleaned up, activists have regrouped, though some of their leaders remain in hiding or behind bars.

The chief demand of the teachers and the coalition remains the ouster of Gov. Ulises Ruiz, who they accuse of being corrupt, using the government to benefit his cronies and unleashing force to squash dissent.

They say they consider Ruiz an example of an old-school Mexican politician, ruling one of the nation´s poorest states like a dictator.

His office declined repeated requests for a response to the allegations.

Many local residents say they fear the activists more than the governor and question their motives. Some participants are undeniably driven by a desire for reforms or wholesale change, but rumors persist that previous demonstrators were either paid or threatened with job loss.

"We will not permit anyone to take our streets," said Freddy Alcántara, president of the Oaxaca hotel association. "If they do again, Oaxaca is finished."

CALDERÓN´S ROLE

For months, city police carrying over-sized batons have been deployed in the vicinity of the town square.

Mobile fences, which can be used to block crowds, have been strategically stockpiled.

A key factor may be how Felipe Calderón handles trouble.

He´s repeatedly vowed to establish the rule of law in Mexico and has deployed thousands of federal police and soldiers to combat drug trafficking.

Mexico City political scientist Juan Pardinas said, in part because of Calderón, he doesn´t believe demonstrators in any renewed push by the movement would be able to consolidate control for long.

"A chief tenet for the past few months has been the use of government force to maintain order," he said. "It is not like Fox, who said nothing is going on or that it is a local problem" rather than a potential national issue.

Noel Lombrera, a state police officer who was off duty and with his family on a recent afternoon, said it is important to not be provoked into violence.

"It will be sad, very sad," he said of the prospect of the plaza again becoming the front line for a clash between the government and demonstrators.

"For years, centuries, this plaza has been the center of our culture."

In fact, the clashes have seeped into Oaxacan culture. Some of the more violent moments are depicted in art galleries, with paintings of police beating demonstrators.

Discarded tear-gas canisters and even police shields and clubs have been crafted into sculptural works.

"Our weapon is art, our ability to express ourselves," said Oaxacan painter Francisco Verástegui. "I saw how they were hitting people and I couldn´t do anything."

Sitting in the town square and listening to marimba music, resident Eligio Paz did not sound like a typical retiree.

"If we raise our voice, they will crush us," said Paz, who supports dissent. "We stay quiet, so they don´t throw us in jail."