* Iselle weakens to tropical storm
* Hundreds still in shelters; thousands without power
* Stronger Julio heads toward islands (Adds revised forecasts)
By Ken Wills
KAPAAU, Hawaii, Aug 8 (Reuters) - Tropical Storm Iselle pummeled the Hawaiian Islands with high winds and heavy rain on Friday, forcing hundreds to seek shelter and knocking out power to more than 20,000 people as residents kept a wary eye on an even more powerful storm headed their way.
Iselle had weakened into a tropical storm before reaching Hawaii and officials said it was blunted to some extent by the state's mountainous Big Island, though high winds and heavy rain were still expected to lash smaller islands in the chain.
As residents were cleaning up on Friday evening, the National Weather Service lifted its tropical storm warning for all of Hawaii.
"I think we've come through in great fashion," Governor Neil Abercrombie told an evening news conference.
Officials, however, warned residents not to become complacent amid massive doses of wind and rain, scattered debris and power outages, and uncertainty over the pathway of a bigger storm hurtling toward them.
"Next on tap is Hurricane Julio, which still is packing winds of about 100 mph (161 kph)," said National Weather Service meteorologist Mike Cantin. "Right now our guidance is indicating it's going to go north (of the state), but that can change and folks need to keep on guard."
State officials also gave the all-clear for a Democratic primary election to proceed as scheduled on Saturday. All but two polling stations on the hardest-hit east coast of the Big Island would be open, they said.
As Iselle passed over the Big Island with winds of up to 50 mph (80 kph) and pummeled eastern areas from Puna to Hilo with heavy rains, some 2,000 people had hunkered down in evacuation shelters across the state. Later in the day, that figure was reduced to about 900 people as many evacuees returned to their homes, said an American Red Cross spokeswoman.
At one point, 23,000 people were left without power on the Big Island and Maui. Officials have succeeded in restoring power to thousands of those customers, but 1,500 were still without electricity on Oahu and 17,000 on the Big Island, according to utility companies.
Abercrombie said earlier that even as the eye of the storm moved south past the Big Island, a broader cone of wind and rain could still affect other islands.
There were no reports of major injuries from Iselle.
Emergency officials found the body of a man in his 50s or 60s in the ocean near Honolulu's Ala Moana Beach Park at 5 p.m. local time, though it was not immediately known whether his death was weather-related, the Honolulu Star-Advertiser newspaper reported.
'NOW THERE'S JULIO'
Julio, which was downgraded to a Category 2 storm on Friday, was barreling toward the islands at about 16 mph (26 kph), carrying maximum sustained winds of 100 mph (155kph), and was expected to affect the islands as early as Sunday.
It was 680 miles (1,095 km) east of Hilo and 870 miles (1,405 km) east of Honolulu, according to the National Weather Service.
"It's raining hard here, but I guess I can expect that the worst of Iselle is over. Now there's Julio to worry about," said Pepeekeo resident Rae Miyashiro, who experienced power outages overnight.
Forecasts showed Julio weakening still further as it nears Hawaii, likely tracking about 150 miles (240 km) north of the archipelago early on Sunday at the earliest, National Weather Service meteorologist Anthony Reynes said.
But even if the storm veers away from the Hawaiian Islands, forecasters said, it could still bring high winds and considerable amounts of rain.
"At the very least it will have a significant impact on surf on north- and east-facing shores - waves could be between 10 and 15 feet or even higher," Reynes said.
In anticipation of the rare back-to-back storms, Hawaii residents have scrambled to stock up on supplies, told by authorities to prepare seven-day disaster supply kits and limit driving.
Hawaii's schools and many stores and offices were closed on Friday, but authorities planned to keep airports open so planes could land in an emergency, although some airlines had canceled flights, officials said.
Oahu has 95,000 visitors, most of them in the Waikiki section of Honolulu, and with hotels full of summer tourists officials ran a special bus service to get hospitality workers to their jobs, despite the closure of other mass transit lines, said Honolulu Mayor Kirk Caldwell. (Reporting by Ken Wills; Additional reporting by Malia Mattoch McManus in Honolulu, Dan Whitcomb and Alex Dobuzinskis in Los Angeles; Writing by Dan Whitcomb and Eric M. Johnson; Editing by Sandra Maler, Bill Trott, Bernard Orr and Eric Beech)