We describe a system of N two-level Rydberg atoms which travel through a resonant cavity and interact with a single mode of the resonator. N is assumed to be on the order of a few tens or hundreds of atoms. In particular, we analyze the case where the atoms are injected to the lower state (absorber) and the system is driven by an external coherent radiation field exactly resonant with the atoms and with the cavity. In the case of a monoenergetic atomic beam, the picture that arises is substantially different from that of standard optical bistability. The switching behavior is not governed by saturation, but by the Rabi cycles of the atoms in the cavity. The hysteresis cycle of the population of the upper level is butterfly shaped. When the bistability parameter exceeds an appropriate second threshold, the system displays multistability rather than simple bistability, and under proper conditions it develops domains of instability in positive-slope regions of the steady-state curve. We analyze the effects of a velocity distribution (thermal or Gaussian) in the atomic beam, and of inhomogeneous broadening caused by stray electric fields. Finally, we discuss the feasibility of an experimental observation of the effects predicted by our analysis.