RATIONALE: Radiation therapy uses high-energy x-rays to damage tumor cells. Drugs used in chemotherapy use different ways to stop tumor cells from dividing so they stop growing or die. It is not yet known which regimen of radiation therapy plus chemotherapy is more effective for rectal cancer. PURPOSE: Randomized phase II trial to compare two regimens of radiation therapy plus chemotherapy followed by surgery in treating patients who have locally advanced cancer of the rectum.

OBJECTIVES: * Compare the pathological complete response, acute and late normal tissue morbidity, patterns of failure, and complete resection rates in patients with locally advanced adenocarcinoma of the distal rectum treated with neoadjuvant chemoradiotherapy comprised of hyperfractionated radiotherapy and fluorouracil vs conventional radiotherapy, fluorouracil, and irinotecan, followed by radical resection. OUTLINE: This is a randomized study. Patients are stratified according to clinical stage (T3 vs T4). Patients are randomized to 1 of 2 treatment arms. * Arm I: Patients receive hyperfractionated radiotherapy (RT) twice daily, 5 days a week for 19 days. Patients receive fluorouracil IV continuously over 7 days a week concurrently with RT. Patients with clinical stage T3 or fixed T4 disease also receive a higher boost dose of RT to tumor. * Arm II: Patients receive conventional RT once daily, 5 days a week for 25 days. Patients receive fluorouracil IV continuously over 5 days a week concurrently with RT. Patients receive irinotecan IV over 1 hour (immediately prior to RT dose) once weekly for 4 weeks. Patients with clinical stage T3 or fixed T4 disease also receive a lower boost dose of RT to tumor. Within 4-10 weeks after completion of chemoradiotherapy, patients on both arms undergo radical anterior resection or radical abdominal perineal resection with preferably a total mesorectal resection. Patients are followed every 3 months for 2 years, every 6 months for 3 years, and then annually thereafter. PROJECTED ACCRUAL: A total of 100 patients (50 per arm) will be accrued for this study within 18 months.