UNESCO's governing body agreed on a compromise proposal allowing the general membership to decide later this year whether to allow the Palestine Liberation Organization to participate. The decision was made in Paris by the Executive Committee of the U.N. Educational, Scientific and Cultural Organization. The proposal was watered down last week after representatives of seven Arab and nonaligned nations agreed to dilute their demand for admitting Palestine to UNESCO "as a member state." The final proposal makes no reference to Palestine as a state. Instead it recommends that members "make Palestine participate as closely as possible in the activities of UNESCO."