(FORTUNE Magazine) - The first thing you notice is that the courtroom is far smaller than you'd expect. The business trial of the century ought to play out on a grand stage. But the trial of Ken Lay and Jeffrey Skilling is unfolding inside a theater that can only be described as intimate. Friends and foes alike--defendants, their lawyers and families, prosecutors, reporters--will be living together in this windowless space for the next four-plus months. They brush past one another on breaks and share uncomfortable rides in cramped elevators. And the former CEOs of Enron, on trial for defrauding stockholders and orchestrating America's biggest corporate fraud, are behaving much as they did back in the day. There's Ken Lay, always the friendly glad-hander, patting the backs of everyone in sight--even those he has no reason to like. And there's Jeff Skilling, the brains of the operation, forcing a smile that doesn't quite hide a snarl. On one elevator ride during a break in the proceedings, he shakes his head in reaction to prosecutor Kathy Ruemmler's methodical questioning of Mark Koenig, Enron's former chief of investor relations. "Welcome to the United States," he says, his voice filled with sarcasm. "Welcome to the United States."

To make the trial even more surreal for those of us who have covered the story for years, the defense lawyers have come to resemble those they're defending. Lay's lawyer, 65-year-old Texas courtroom legend Mike Ramsey, is as folksy as Kenny Boy himself. Daniel Petrocelli, the L.A. lawyer best known for getting a civil-court jury to find O.J. Simpson liable for murder, defends Skilling in language that could have come from Skilling himself.

But the biggest surprise of the trial so far is the path the defense is taking to keep its clients out of jail: The two men are seeking not merely acquittal but flat-out redemption, so they offer up a remarkably audacious theme: There was absolutely nothing wrong at Enron. Enron was a "shining star," declares Petrocelli early in the trial. "The businesses could not have been doing better." Ramsey, who won acquittal for real estate heir Robert Durst (charged with murder after admitting to shooting his elderly neighbor and dumping the body into Galveston Bay), says in his rambling opening argument that Enron was "one of the finest free-market institutions the country has ever seen--or the world has ever seen." And what of the 16 former Enron execs who pleaded guilty to crimes, many of whom will testify against Lay and Skilling? They didn't commit crimes either--they were coerced into bogus confessions by the government. (The exception: the defense's designated bad guy, former Enron CFO Andy Fastow, and his two deputies.) To sum up: Even people who say they are guilty are not guilty!

That's a lot to swallow. It requires jurors to believe that a huge, healthy company could vaporize overnight. The defense explanation for Enron's failure? A panic-driven "run on the bank" triggered by short-sellers and the media, who focused unfairly on Fastow's private partnerships and the company's accounting. Despite murky language in Enron's SEC filings, the defense insists that Fastow's LJM partnerships were properly disclosed. (Petrocelli: "Not a single person thought there was anything wrong with this.")

The burden of proof is on the government. But the opening argument on behalf of the Justice Department's special Enron Task Force was sharp. Prosecutor John Hueston said the tale of Enron is "a simple case. It is not about accounting. It is about lies and choices." At Enron, he argued, profits were a fungible commodity. For example, a July 17, 2000, e-mail, flashed on a giant screen in the courtroom: "Speaking of closed, it looks like we may be looking to beat the Street by 2 cents instead of 1 cent. I understand [former chief accounting officer Rick Causey] spoke to Skilling today, and this was his preference." There's nothing wrong with trying to meet Wall Street's numbers. But this e-mail was sent more than two weeks after the quarter had "closed," as the accountant who wrote it noted. The profits from actual business had been tallied. Yet the number Enron decided to report kept climbing. A July 14 draft press release showed earnings at 32 cents (matching Wall Street's estimate); a July 17 draft put the number at 33 cents; after Skilling's reported intervention, Enron eventually announced that it had earned 34 cents.

How will the defense handle such evidence? Addressing the e-mail, and earnings manipulation, Petrocelli told jurors, "It's a totally normal document. There are countless documents like that about what numbers have to be pulled together to meet the Street's earnings." It was a stunning, Enron-like "You just don't get it" claim, a favorite Skilling line. Lawyers watching the trial have voiced surprise to see that strategy instead of one that encourages the jury to view Lay and Skilling as fallible but not criminal. But if it's a ballsy, risky defense, that's clearly what Lay and Skilling want. In the fight of their lives, the two men are offering a defense worthy of Enron.