All locked up … Kathryn Bigelow is flanked by Steve Martin and Alec Baldwin after winning the best picture Oscar, joining her Academy Award for best director. Photograph: Kevin Winter/Getty Images

For once, the Oscars were a genuine nail-biter. Right through to the final reel, it was too close to call between the David and Goliath of this year's contenders: Avatar, James Cameron's 3D space opera, and The Hurt Locker, Kathryn Bigelow's low-budget drama about a squad of US bomb disposal experts working in Iraq. That Bigelow and Cameron were once married merely heightened the drama – quietly exploited by the ceremony producers who sat them directly behind each other – as did the huge disparity in their box-office takes (with over $2.6bn, Avatar is the biggest film of all time; The Hurt Locker has just topped $21m).

But, in the end, the underdog momentum gathered by The Hurt Locker was just too much for even the mighty Avatar to withstand, despite 11th hour upsets such as the banning of co-producer Nicolas Chartier from the ceremony, and a possible lawsuit in the offing over the film's authorship. The film took six awards, including both best director – making Bigelow the first woman ever to win the award – and best picture, collecting them in such swift succession that Bigelow was left literally breathless.

"It's the moment of a lifetime," she said after being handed the best director prize by Barbra Streisand, who had herself been the first woman to win a directing Golden Globe, for Yentl in 1984. Bigelow dedicated the award to the people of Jordan, where the film was shot, and to the "women and men in the military who risk their lives on a daily basis – may they come home safe". In her speech accepting the best picture award, presented by Tom Hanks, Bigelow extended this to all servicemen and women around the world. The film also took Oscars for Mark Boal's original screenplay, best film editing, sound editing and sound mixing.

Best actor went, predictably, to Jeff Bridges for his role as a washed-up, strung-out country singer in Crazy Heart. The star looked as comfortable ambling onstage as only one raised in the bosom of Hollywood could. His standing ovation was affectionate and deserved.

That accorded to Sandra Bullock, who won the best actress award for her role as a tough-talking woman who takes a troubled football prodigy under her wing in The Blind Side, felt slightly less so. Despite British presence in the category, including rising star Carey Mulligan for An Education and Helen Mirren for her role as Sofia Tolstoy in The Last Station, it was a relatively weak year. But Bullock is a much-loved Hollywood personality, admired as much for her gameness as her acting talents. On Saturday night she had taken to the stage at the Razzies to receive the award for worst actress of the year, for All About Steve, in which she plays a cruciverbalist-turned-stalker.

As expected, the best supporting actor award went to Christoph Waltz, who has so far won every award going in the category for his masterly turn as a sadistic "Jew-hunter" in Inglourious Basterds. But it must have been a blow to Quentin Tarantino that this was the only one of the film's eight nominations that bore fruit (James Cameron's Avatar – nominated in nine categories – did at least go home with three: for art direction, cinematography and visual effects).

Also unsurprisingly, the best supporting actress award went to Mo'Nique, who plays an abusive mother in Precious: Based on the Novel by Sapphire. On the red carpet outside the Kodak theatre, she had been as laissez-faire about the possibility of a victory as only one so heavily-tipped could be: "A win is when someone says [their] life is different because of Precious," she said.

It wasn't the harrowing film's only honour of the evening – there was a surprise in the best adapted screenplay category when Geoffrey Fletcher snatched it from the teeth of An Education's Nick Hornby and Armando Iannucci's In the Loop team. No one was more surprised, it seemed, than Fletcher himself, who struggled through his 45-second address, choked with emotion. "I wrote that speech for him," boasted host Steve Martin directly afterwards – one of many big laughs he and co-host Alec Baldwin received during the evening.

It was a disappointing night for the Brits, especially in the light of last year's Slumdog Millionaire sweep. There was nothing for Colin Firth, Mulligan, Mirren, Hornby or Iannucci. Nothing, even, for Nick Park – usually something of a sure thing at the Oscars, with five already. But in this instance his latest Wallace and Grommit was pipped to the post for best animated short by Nicolas Schmerkin's Logorama.

Also snubbed were the critics' favourites The White Ribbon and A Prophet, which lost out to the Argentinian film The Secret in Their Eyes. But then, when it comes to best foreign language film, the Academy has a history of singing to its own tune.

And, while the ceremony itself began with a full-throttle song-and-dance number, courtesy of TV's Neil Patrick Harris – splendid in a sequinned blazer and accompanied by a bevy of be-feathered dancers – that turned out to be the only song on offer in a ceremony that, though long on glitz, was short on bona fide razzmatazz.

Though winners' acceptance speeches were limited to 45 seconds, it was still a long evening, perhaps a product of the Academy's decision to – after a 67-year hiatus – increase the number of best picture nominees from five to 10. This meant much of the ceremony's running time was devoted to stars introducing clips from the runners and riders and, after their opening routine was complete, surprisingly little time was left to the two hosts. Martin and Baldwin began the night with a healthy dose of celebrity scepticism, dishing out insults of refreshing frankness to the assembled mob. But, as the evening wore on, the poking-of-fun descended into a Mexican wave of genuflection as they, plus guest presenters, succumbed to the pull of actor flattery.

In awarding the first ever best director Oscar to a woman, and the first screenwriting award to an African-American, this was a night of genuine progress and optimism for Hollywood. But the revolution has rarely felt so predictable.