Full-fledged fighting raged in Georgia's separatist region of South Ossetia on Friday making short shrift of an Olympic peace set to blanket the opening ceremonies in Beijing.

Russia's premier Vladimir Putin and US President George W Bush, arranged on different sides of the conflict, spoke with "one voice," according to Putin. "Everybody agrees - nobody wants to see a war," the Russian leader said.

But such words fell flat as pro-Western President Mikheil Saakashvili, a close US ally, ordered a full-scale mobilization to re-take the separatist region and Russia deployed troops and fighter jets to "protect its citizens" against Georgia's "dirty venture."

Georgia, on the Black Sea coast between Turkey and Russia, was under Moscow's rule in their two centuries of shared Soviet history, but this influence has been challenged by the United States which is trying to win a foothold in the strategic Caucasus region.

Pretenses of Russian-mediated peace talks scheduled Thursday dissipated in the face of the spiraling fighting and analysts seemed tragically unsurprised to see tension derail to war.

"South Ossetia has been routed, that's clear. Now it will be a difficult war between Russia and Georgian forces with South Ossetia taking a secondary role," he said.

After Russian media reported at least 10 of its peacekeepers dead in the fighting, state-owned Channel One television showed images of long Russian military convoys moving across into the mountainous South Caucasus.

The roughly 70,000 South Ossetians and residents in Georgia's other rebel region of Abkhazia, who aspire to re-unification with Russia, became an irrevocable part of Kremlin foreign policy since the beginning of this year, used as rhetorical collateral in Russia's disagreements with the West.

With Kosovo's independence in February, Russian opposition took the form of a threat that its example would provoke a "domino effect" in the Caucasus.

This fear was no less present in Georgia, which has not recognize Kosovo's western-supported independence, and Moscow's line served to amplify separatist claims in the region.

Saakashvili has made re-asserting control over the rebel regions a priority of his presidency, as part of a concerted policy for rapprochement with the West focused in a bid to join NATO in April.

Then-President Putin projected NATO's eastward expansion as a menacing betrayal and perpetuation of Western containment policy, but Moscow's key argument ran contra: That NATO membership would re- ignite civil war against Tbilisi's control.

Had Tbilisi become a NATO member the alliance would be obliged to protect it militarily, pitting Western alliance troops against Russian fighters - a fact that did not escape European diplomats who voted to delay Georgian membership in the alliance despite Bush's personal backing of the bid.

But analysts point out that Russian policy was not all war- mongering, and Moscow having lost a dangerous political double game may find itself trapped in a war that, prolonged, could prove immensely costly.

Just before April Russia ended a 16-month blockade and resumed air and postal links to Georgia, holding out the possibility of dropping economic sanctions as well.

Russia's special envoy Yuri Popov arrived in Tbilisi to mediate peace talks between the two sides on Thursday, even as the fighting escalated out of control with both sides returning heavy artillery shelling and making bomber sorties with Sukhoi SU-27 fighter jets.

Now, Felgenhauer says, Russia has made a choice that will drag it into a prolonged and difficult war because mountains form a barrier between the region and Russia leaving only a one-road pass, closed off in the winter.

"It's a logistical nightmare to try to take South Ossetia back from Georgia's quite good military," Felgenhauer said.

"Massive Russian intervention may turn out to be costly, not only in terms of human costs ... it could be politically devastating for Russia's standing and economy," he added.

Georgia, whose army numbers around 18,000 soldiers, had surrounded the South Ossetia capital Friday.

Such a war could swiftly create a political rift between Russia and the West, whose support remains with Georgia for the present, other Russian observers said.

The United States sent its envoy to the region on Friday, saying "We support Georgia's territorial integrity and we call for an immediate ceasefire," State Department spokesperson Amanda Harper said.