* Fallen Libyan leader, son interred in secret spot
* Fugitive Saif al-Islam said to be near border crossing (Adds Feltman comments, NATO meeting)
By Barry Malone
TRIPOLI, Oct 25 (Reuters) - Muammar Gaddafi and his son Mo'tassim were buried in a secret desert location on Tuesday, five days after the deposed Libyan leader was captured, killed and put on grisly public display.
"He (Gaddafi) has just been buried now in the desert along with his son," National Transitional Council (NTC) commander Abdel Majid Mlegta told Reuters by telephone.
Gaddafi's cleric, Khaled Tantoush, who was captured with him, prayed over the bodies before they were taken from the compound in the coastal city of Misrata, where they had been on show, and handed to two NTC loyalists for burial, he said.
The NTC had worried many outsiders by displaying the corpses in a meat locker in the fiercely anti-Gaddafi city of Misrata until their decaying state forced them to call a halt.
Under pressure from Western allies, the NTC promised the same day to investigate how Gaddafi and his son were killed. Mobile phone footage shows both alive after their capture. The former leader was seen being mocked, beaten and abused before he died, in what NTC officials say was crossfire.
The saga has made Western allies of Libya's interim leadership uneasy about the prospects for the rule of law and stable government in the post-Gaddafi era.
"This is a test. The NTC has repeatedly said that they will distinguish themselves from the Gaddafi regime in terms of the respect of human rights and the rule of law," U.S. Assistant Secretary of State for Near Eastern Affairs Jeffrey Feltman said. "Now is the time for them to begin actions that will help them reinforce these words," he told a news conference in Morocco
Most Libyans, however, had little sympathy for Gaddafi or the way he was treated.
"I laughed when I saw him being beaten as he deserved to be. And I laugh again now that I know he is in the ground," said Emani Zaid, 20, a student in Tripoli. "If the men who buried him are true free Libyans, they can keep the secret (of his grave)."
Determined to prevent Gaddafi's grave becoming a shrine for his supporters, the NTC wants its location kept secret, refusing custody to his tribe, many of whom live in Sirte.
The prayers for the dead were attended by two of Gaddafi's cousins, Mansour Dhao Ibrahim, once leader of the feared People's Guard, and Ahmed Ibrahim. Both were captured with him after a NATO air strike hit a convoy of vehicles trying to break out of Sirte, Gaddafi's home town, just after it fell.
"The NTC officials were handed the body after the sheikh completed the early morning ceremony and are taking him somewhere very far away into the desert," Mlegta said.
"THROW HIM IN A HOLE"
For Ali Azzarog, 47, an engineer, it was good riddance.
"Throw him in a hole, in the sea, in garbage. No matter. He is lower than a donkey or a dog and only foreigners say they care about how we killed him. And they are lying," he said.
Mohammed al-Sharif, a 22-year-old describing himself as an aspiring writer, said: "Let the dust of the desert sweep over the hole where he was buried ... Then the name 'Muammar' can be forgotten and our children will never know of this time."
Libyans rose up against Gaddafi's 42-year rule in February, defying a violent response that was parried by NATO air power under a United Nations mandate to protect civilians.
Libyan interim Oil and Finance Minister Ali Tarhouni said the NTC wanted NATO to maintain its mission for another month.
NATO ambassadors are expected to meet on Wednesday to take a formal decision on when to end the Libya mission, having taken a preliminary decision on Friday to end it on Oct. 31.
"We said that we would consult closely with the United Nations and the NTC and that process of consultations is ongoing," NATO spokeswoman Oana Lungescu said. "(NATO ambassadors) will take a formal decision this week."
She declined to say whether NATO might extend the mission.
"I don't know whether there is a formal request. All these things remain to be sorted out."
Gaddafi's death ended eight months of war that had dragged on in Sirte and elsewhere even after the NTC's ragtag militias captured the capital, Tripoli, in August.
Hatred of Gaddafi unified his disparate opponents, who may now tussle for power during a planned transition to democracy in a nation riven with regional and tribal rivalries.
At times, Gaddafi's body appeared to have become a macabre bargaining chip for Misrata, which endured a pitiless war-time siege, and whose leaders now demand a big say in the new Libya.
Fears that Gaddafi's sons might wage an Iraq-style insurgency have faded since the deaths of Mo'tassim and his brother Khamis, a military commander, who was killed earlier.
But well-armed fighters in the former Gaddafi stronghold of Bani Walid, which fell to the NTC this month, told Reuters they were planning to keep up their struggle.
Abuses apparently committed by both sides in the civil war may also impede reconciliation. New York-based Human Rights Watch urged the NTC on Monday to probe an "apparent mass execution" of 53 people, apparently Gaddafi loyalists, whom it found dead, some with their hands bound, at a Sirte hotel.
In Tripoli, a 33-year-old waiter, who was too scared to give his name, praised what he said was Gaddafi's courage.
"If you say Gaddafi died like a coward, you are wrong. He died proud like a lion. He said he would never leave Libya and he did not leave. Fight, fight, fight. I was not a Gaddafi supporter before this revolution but when I saw his bravery, I knew he was the only man for Libya," he said.
One of Gaddafi's sons, the enigmatic Saif al-Islam, remains on the run. Once viewed as a moderate reformer, he vowed to help his father crush his enemies once the revolt began.
An NTC official said Saif al-Islam was in the southern desert near Niger and Algeria and was set to flee Libya using a false passport.
He said Gaddafi's former intelligence chief Abdullah al-Senussi who, like Saif al-Islam, is wanted by the International Criminal Court (ICC), was involved in the escape plan.
In Niger, there was no official comment on Saif al-Islam, but the government has made clear its support for the ICC.
Gaddafi's death allowed the NTC to declare Libya's "liberation" on Sunday in Benghazi, the seat of the revolt.
Until the public was finally denied access on Monday, fighters were still ushering sightseers into the chilled room where the bodies of Gaddafi, Mo'tassim and his former army chief lay, their flesh darkening and leaking fluids.
Some Libyans are uncomfortable at the way Gaddafi was killed and his body treated. "I regret it, really," said lawyer Sawani Ghanem, 30, adding that Gaddafi had tainted Libya as a land of terrorists. "We should have tried to show the world we could be more humane and aspire to change." (Reporting by Taha Zargoun in Sirte, Barry Malone and Jessica Donati in Tripoli, Rania El Gamal and Tim Gaynor in Misrata, Christian Lowe, Jon Hemming and Andrew Hammond in Tunis, Hamid Ould Ahmed in Algiers, Samia Nakhoul in Dubai, Abdoulaye Massalaatchi in Niamey, Matt Falloon in London, Souhail Karam in Rabat; Writing by Alistair Lyon and Jon Hemming; Editing by David Stamp)