In each category, nominees are listed in alphabetical order, followed by my personal favorite.
Avatar: The worldbuilding is amazing. One of the most important ways to separate good sci-fi/fantasy from bad is by how well fleshed-out the fictional universe is. If it's possible to role-play or write (halfway-competent) fanfics that use the setting but not the main characters, it passes the test. You can roleplay in the Wheel of Time universe without playing Rand or Egwene, but Sword of Truth fanfics without Richard and Kahlan are barely recognizable. Or look at Buffy vs. Charmed. Considering only movies that aren't based on books or TV shows, I'd put Avatar third-all-time behind Star Wars and The Matrix (fourth if you give the Kristy Swanson movie credit for the whole Buffyverse, but I don't think that's fair or even logically sound). Pandora is a world in which you can tell a wide variety of interesting stories. However, Avatar's script is NOT one of them. The premise is a flimsy excuse to get humans involved--Cameron himself stated that unobtanium (as joke names go, only mcguffinite would have been better) has nothing to do with the bio-computer-network that defines the world, it's just coincidence that there's a big deposit under the Navi village. The science team is led by someone who is somehow both a botanist and a zoologist, but none of the other members even HAVE specialties. The entire plot revolves around the idea that ex-Marine Jake is the closest thing to a real cultural anthropologist who has ever been avatarized, which is profoundly stupid. For the most part, no attempt at all is made to develop characters. In one case--Trudy's change of heart--this failure at characterization actually creates a plot hole. It's only believable that exactly one military-type would end up on the side of the scientists and natives if she has any unique perspective. The only thing that distinguishes Trudy from any other grunt is screen time--and even that is mostly post-reversal. Even her line when she changes her mind--"I didn't sign up for this!"--is patently false. It's precisely what she signed up for, she just no longer believes it's right. And her first act of treason, changing sides in mid-battle, is completely unpunished. In the case of the Navi, the absence of character development beyond stock aboriginal stereotypes is an offensive crutch propping up the bullshit Noble Savage idea that nobody in their culture could possibly benefit from technology or specialized labor, which itself is the only justification for the third-act war. Giovanni Ribisi's only two character traits are caring about results and being willing to listen to reason, but the war starts when, and because, he suddenly decides not to listen to reason precisely when Jake is actually starting to get results. The character's only reason for existing is to start the war, but his only character develolpment establishes that he would not do so under those circumstances. After Jake, Trudy, and the other scientists escape from the military, one scientist stays back as a spy. That he could do so without being caught is implausible, that he could actually break the others out of prison in the first place without being caught is impossible--are there really no security cameras? The supposed climax of the plot is a faceoff between Jake and the scar-headed leader of the military (who, if not for movie-magic, would have died half a dozen times already) because that's what the formula says should happen. But that's the second half of the mentor-and-protege-on-opposite-sides formula, which is the wrong formula. Jake and Scarhead have an arrangement that is purely business, with little direct communication and no emotional bond. The final showdown is part of that formula to bring the character arcs full-circle. It has to happen because the first half of the formula sets it up. I'm no great fan of cliche, but things become cliche because they work. If you're going to use part of a formula, either you have to use the rest of it too, or you have to have a reason to subvert it and set up the subversion properly. The film as a whole is somewhat elevated by the worldbuilding and spectacle factor, but the flaws are too big too many for it to deserve consideration for Best Picture.
The Blind Side: Every character, white or black, is an offensive stereotype. The movie displays no respect for the viewer whatsoever--everything that can be dumbed down is, any moral issue that is (intentionally) raised is discussed by the characters at length but not in any depth. There's not a single thing in this film that isn't handled with more subtlety and honesty in Remember The Titans. "More simplistic than Remember The Titans" is not a compliment. If you take everything I don't like about RtT, combine it with everything I don't like about Crash, you get this. The paternalistic, White Man's Burden portrayal of the main character is simply shocking. To be fair, it's a basically competent piece of filmmaking. A lot of the movies I have to see make me wonder how anyone involved even has a job in the industry, but this is at least a real movie. There are no plot holes and nobody ever behaves drastically out of character. It has decent acting. The camerawork isn't distractingly artsy or misframed. If it was the worst movie I had seen in the past year, I'd be pretty happy. But that's about as backhanded as praise gets.
District 9: This is not a metaphor for apartheid. Well, it is, but that's not the point. The superficial anti-apartheid message is cover for the more subtle but more central and better developed commentary on the military-industrial complex. The South African government and United Nations have outsourced the entire project of dealing with the aliens, and the whole movie is an exploration of the consequences of that decision and the ways the private sector and public sector naturally and necessarily have different motives. That has to be addressed delicately because it's very politically charged. When you talk directly about a politicized issue, you only get through to the people who already agree with you. Everyone else will feel like they're being preached at, and they'll be right. Aside from simply avoiding being off-putting, the "show, don't tell" rule lets you make a better argument by demonstrating the reasons behind your belief. By hiding the real issue under something generic that everybody agrees about, like "apartheid was bad," Blomkamp was able to make a much stronger and more openly partisan case against corporate militia than he could have otherwise. Not to mention that it's all contained in a story entertaining enough to satisfy the unwashed masses. If your primary criterion for film is how well the various elements (acting, directing, main plot, subplots, character development, cinematography, philosophical message, entertainment value) of flimmaking fit together into a coherent whole, then this isn't just the best film of the year, it's the best of the last several years.
An Education: I haven't seen it yet. We're getting it at Lennox this weekend, so I will soon.
The Hurt Locker: It's hard to describe this film in any way other than "see it." This year was a good one for fans of psychological character studies, and this might be the best of the bunch. There's a scene near the end, while Jeremy Renner is back home, that contains my favorite minute of film of the year. If you've seen it you know what scene I mean.
Inglorious Basterds: There's a lot to like about it, but it's not anywhere close to the film it could have been if Tarantino didn't surround himself with yes-men. Usually my favorite thing about QT is that he knows which characters and plot elements to focus on and which to leave as recurring, undeveloped leitmotifs, but the biggest flaw of this film is its utter failure in that department. Shosanna and Col. Landa are the most interesting, complex, developable characters in the film, but combine for maybe 40 minutes of screen time in a 150-minute movie. The titular Basterds are riotously entertaining five minutes at a time, but one-dimensional and monotonous. Most of them don't even have names or lines. They get the remaining 110 minutes. It's not just that the film is a perfect beginning, a perfect ending, and two hours of filler, it's that it didn't have to be.
Precious: If I was given a short plot outline of this movie, I'd guess that it was a superficial, unintentionally racist, shameless Oscar-baiting mess. To make it work at all, it had to have character development and penetrating honesty, both taken to all-time-great extremes. Fortunately, that's exactly what it has. It has none of the surface trappings of a horror film, but that's what it is. A teenaged girl (Precious) and children (her toddler and infant) trapped in a creepy house (literally, a filthy apartment; figuratively, the culture of self-perpetuating urban poverty) with/by monsters (her parents, more literally than you would believe), struggling to escape with the protection of an outside hero (her teacher), eventually succeeding but not without paying a harsh price (which would be a spoiler). Several scenes, particularly the mother's attempt to justify her behavior to a social worker, are much more horrifying than anything in the so-called horror genre.
A Serious Man: I enjoyed it thoroughly, but I'm not sure it's Best Picture material. If it has anything to say at all, it's not me it's saying it to. Middle-class Jews who grew up in the 60's in midwest college towns make for a pretty narrow target audience. The comedic take on the Book of Job is a clever idea, and the execution is terrific (which goes without saying for the Coen brothers), but it's a one-note song. Well worth seeing, borderline worth nominating, but one of the Coens' shallowest films.
Up: When you're a child, there's a pure, unadulterated joy associated with watching a movie. When you've seen enough movies to understand that some of them are good and some of them are bad, that joy is very difficult to recapture--you're always dissecting the bad ones and waiting for the other shoe to drop in the good ones. It's a rare film that can make a jaded cynic like me feel like I did the first time I saw Mary Poppins.
Up In The Air: I strongly disagree with the message of the film--that nobody can be truly happy living the lifestyle that George Clooney's character does. But it's still one of my favorite movies of the year. That's how good the other parts of the film are, and how well it follows "show, don't tell."
Unless one of the three I haven't seen really wows me, I think Precious deserves to win, but it's a close call over D-9 and Hurt Locker.
Kathryn Bigelow, The Hurt Locker: The film is a character study and an action movie and a soldier-friendship drama, which call for different directorial skills and styles. All three are done well.
James Cameron, Avatar: The nomination is justified by the technical aspects of directing alone. My problems with the movie are 90% Cameron-as-writer, 10% Cameron-as-director, and 0% Cameron-as-producer. That 10% is still big enough that I don't think he should win, but it won't be a gross miscarriage of justice when he does.
Lee Daniels, Precious: When that many unknowns (Gabourey Sidibe, Paula Patton) and no-talent hacks (Mariah Carey, Mo'Nique) turn in performances that good, it's a safe bet that the director is the reason why.
Jason Reitman, Up In The Air: If you're making a comedy-drama, the darker the comedy, the harder it is to keep it balanced--dark comedy is not a tension-relieving change of pace from drama like laugh-out-loud comedy is.
Quentin Tarantino, Inglorious Basterds: As with Cameron, my problems are more with the writing than the directing, but the distinction is much blurrier in Tarantino's case.
I like Bigelow, but if you prefer Reitman I won't say you're wrong.
Jeff Bridges, Crazy Heart: This performance rivals The Dude as Bridges' career-defining role. My big thing with acting is how much the actor does beyond what's explicitly in the script, and I have some major complaints about this script. Bridges and T. Bone Burnett get just about all the credit for the whole movie.
George Clooney, Up In The Air: He faces the public perception of him as a superficial playboy (a reputation for which he has nobody to blame but himself) head-on in this role. It's certainly a good performance, but I don't think he would have been nominated if not for the connections to his own life. Contrast with Mickey Rourke in The Wrestler, whose performance would have deserved the Oscar no matter what his personal life had been like.
Colin Firth, A Single Man: I never once thought of Mr. Darcy in Pride & Prejudice while watching this, a comparable accomplishment to Bridges playing someone who doesn't remind me of Lebowski.
Morgan Freeman, Invictus: He was nominated basically for being Morgan Freeman and playing Nelson Mandela. He evokes Mandela's appearance and mannerisms impressively, but gets just as much of the blame as the writers for sanitizing and oversimplifying a deeply complex person. It's a travesty that he was nominated over Sharlto Copley in District 9, Vincent Gallo in Tetro, Sam Rockwell in Moon, Joseph Gordon-Levitt in (500) Days of Summer.
Jeremy Renner, The Hurt Locker: Most actors would have gone too over-the-top with this role. Not on purpose, but because it's a tightrope walk to get the character right. Renner never falters, but the performance isn't as memorable as the other nominees.
Colin Firth is the best here, but in ways probably too subtle for the voters to pick him over Bridges, who is almost as deserving.
Sandra Bullock, Blind Side: She's one of the only worthwhile things about the film. For an actor this famous, it's an accomplishment if I'm thinking of her character as "Leanne" rather than "Sandra" by the end. But there's absolutely nothing challenging about the role, no decisions for her to make that a community-theater actor couldn't get right.
Helen Mirren, The Last Station: haven't seen it yet.
Carey Mulligan, An Education: haven't seen it yet.
Gabourey Sidibe, Precious: The most subtle, gradual performance as a dynamic character I saw from any actor or actress all year. Only Firth and Gallo are close.
Meryl Streep, Julie & Julia: The epitome of going beyond the script. Took a deliberately superficial film and gave it depth.
Of Streep and Sidibe, I'm more certain that Streep gets the credit, rather than the writer or director. Both are worthy.
Matt Damon, Invictus: He pulls off a difficult accent, but the script neither provides anything interesting or difficult for him to do nor gives him the leeway to embellish.
Woody Harrelson, The Messenger: It's very hard to give the audience a look inside the head of an emotionally-closed off character.
Christopher Plummer, The Last Station: haven't seen it yet.
Stanley Tucci, The Lovely Bones: In a way, he's too good. It's not believable that someone that creepy isn't a suspect.
Christoph Waltz, Inglorious Basterds: He's the biggest reason nobody noticed the major problems with the film.
Waltz, hands down. Might be the first unanimous vote in Academy history.
Penelope Cruz, Nine: Inexplicable. Everyone involved in the film sets a new career low. Her only job in it is to look good in sexy lingerie. She succeeds, but I didn't know they gave out Oscars for that. Don't be surprised if Julianne Moore "accidentally" spills red wine on Cruz's dress at the ceremony.
Vera Farmiga, Up In The Air: My favorite thing about the performance is a plot spoiler.
Maggie Gyllenhaal, Crazy Heart: Like Matt Damon, it's the script's fault she's undeserving. She has a little more to work with than he does, though.
Anna Kendrick, Up In The Air: She manages to steal scenes from George Clooney.
Mo'Nique, Precious: So good that I'm at a loss for words.
Usually the supporting categories are too close to call and the lead categories have obvious choices. Other way around this year. It's Mo'Nique's.