INDEPENDENTS DAY IN OSCAR RACE : SMALLER FILMS GET BIG PLAY FROM ACADEMY.

Byline: Bob Strauss Daily News Film Writer

If you ever wanted to know why psychiatrists do so well in Hollywood, you need look no further than Tuesday's Oscar nominations list.

The nominations for the 69th Annual Academy Awards represent a stark admission that most members of the movie establishment hate what they make their livings making. The industry collectively agreed that nothing that came out of its own commercial system was as worthwhile as the nonstudio films ``The English Patient,'' ``Fargo,'' ``Secrets & Lies'' and ``Shine.''

What is traditionally the major players' flashiest forum for self-congratulation looks more, this time around, like an act of repentance. Apparently out of guilt for a year spent raking in bucks off the likes of ``Independence Day,'' the movie moguls acknowledged that when it comes to artistry, it's gotta be Independents Day.

Capping a trend that's been building since the late 1980s, independent productions dominated seven of the eight major awards categories (only Supporting Actor went 3-to-2 for the studios). And unlike in the past, when indies did well in the nomination round but were usually beaten by studio productions on Oscar night, off-Hollywood pictures are the front-runners in most of this year's races.

Perhaps the funniest aspect of all this is that last year's most dysfunctional major, Sony, was the only one that held its own against the indie onslaught. What's ironic is that Sony's best shots - ``Jerry Maguire'' and ``The People vs. Larry Flynt'' - cut each other off at the knees. ``Maguire'' was the only studio entry in the Best Picture category, but its director, Cameron Crowe, was aced out by ``Flynt's'' Milos Forman. Crowe got his back, sort of, in the Original Screenplay race, where he was mentioned but ``Flynt's'' much-admired Scott Alexander and Larry Karazewski weren't.

This leaves ``Maguire,'' the Hollywood system's one white hope, weakened. No movie has won a Best Picture Oscar without a directing nomination since ``Driving Miss Daisy'' in 1989.

Even when the big studios tried to make provocative, independent-style films, it didn't work. ``Flynt'' is the prime example; more controversial and just as accomplished as either ``Patient'' or ``Shine,'' it only picked up two nominations, for Forman and lead actor Woody Harrelson.

Harrelson's co-star, Courtney Love, was doubly hurt. First by a studio campaign that wasn't sure whether she was a lead or supporting actress candidate, and then by a never-countered perception that, as Flynt's druggie outrageous wife, she was only playing a variation on herself (a precedent that could mean bad news for Howard Stern a year from now).

Then there is ``Mother,'' Paramount's just-like-an-indie-except-for-the-label Albert Brooks comedy, which got totally blanked; even in the lead actress category, where comeback-of-the-year Debbie Reynolds once seemed the surest of things.

Second funniest aspect of all this: ``Evita'' actually tied ``Maguire'' for studio film with most nominations, five. What's ironic is that none of this ultimate Hollywood production's nods were in a category sexier than Original Song, depriving us even of a winner in the ballyhooed Madonna/Courtney battle of the rock divas.

While it can, and will, be argued that contenders like ``Patient'' and ``Shine'' are independents in distribution entity only - that the former is the kind of lavish historical romance Hollywood has always deemed prestigious and the latter cleaves strictly to the old overcoming adversity, feel-good formula - the academy deserves credit for also recognizing genuine daring when it sees it.

The arch, mean-spirited comedy of ``Fargo'' would, in any conventional year, be the kiss of death when it comes to a Best Picture nomination (``Maguire'' also breached the academy's traditional reluctance to view comedies as Best Picture material). Billy Bob Thornton's highly idiosyncratic performance and script for ``Sling Blade'' had an impact far beyond the minute audience for his directing debut - although it's no surprise that the academy's actors' branch went whole hog for Billy Bob, who got away with the kind of complete self-indulgence they all long to copy.

Emily Watson, the young English actress who gave such a raw, harrowing performance in the difficult art film, ``Breaking the Waves,'' has got to be the best-deserved long-shot nomination in years. And although it came as no surprise, the very fact that Lauren Bacall received the first Oscar nomination of her legendary career was immensely satisfying.Almost made up for the Debbie Reynolds snub.

Other nice semi-surprises included mention of Caleb Deschanel's and Chris Menges' superb cinematography for, respectively, ``Fly Away Home'' and ``Michael Collins''; nomination of Paul Brown's witty costume designs for the barely remembered ``Angels and Insects''; and the much-reviled Documentary Feature committee's recognition of ``When We Were Kings,'' Leon Gast's fascinating film that took 22 years to complete about the Muhammad Ali-George Foreman Zaire fight.

And for the first time in a dog's age, a Woody Allen movie wasn't nominated for anything.

Despite this being the most revolutionary of years, some academy habits remained stubbornly in place. Look at the nominees in the two lead acting categories; all of them except Tom Cruise and Frances McDormand play people with mental, emotional or medical conditions, always an express lane to academy voters' hearts. And McDormand's ultra-pregnant police chief certainly has a biological burden to deal with, as well as that speech impediment that makes her say ``You betcha'' all the time.

And it's instructive to note that writers who landed in eight of the 10 screenplay slots also directed their films. Proof that, whether they identify themselves as indies or industry insiders, most movie folks still play by that most fundamental Hollywood power cliche:

CAPTION(S):

21 Photos

Photo: (1--6--Cover--Color) Oscar hates Hollywood

Independents dominate, box-office winners

Best Picture Of The Year

(7) The English Patient (Saul Zaentz, producer): Its tony British stars, literary origins and sweeping scope - it's a sand dune epic that has been compared to ``Lawrence of Arabia'' - likely will conspire to make academy voters more comfortable with this choice than any of the others.

(8) Fargo (Ethan Coen, producer): Wicked good fun from a pair of sibling filmmakers whose output has made them critical favorites from the start, ``Fargo'' ultimately will prove too dark and twisted to go home with the golden boy.

(9) Jerry Maguire (James L. Brooks, Laurence Mark, Richard Sakai and Cameron Crowe, producers): The only Best Picture nominee that's proving that ``kwan'' can equal major coin at the box office, but it's still an intimate story, and it's still about an agent - a job category about as popular as ``Larry Flynt's'' pornographer with a lot of academy members.

(10) Secrets & Lies (Simon Channing-Williams, producer): Life's terrible, awful comedy is conveyed with acres of humanity and buckets of tears by director Mike Leigh and his remarkable cast, but the English working-class saga will ultimately prove too odd, upsetting and intimate to be the top vote-getter.

(11) Shine (Jane Scott, producer): Remarkable filmmaking from Australia's Scott Hicks and a remarkable journey from the independent outskirts - the film was discovered by U.S. distributors when it premiered at the 1996 Sundance festival - to the industry's inside circle. Has an outside chance of giving ``The English Patient'' a run for the Oscar.

BEST SUPPORTING ACTRESS

(12)Joan Allen (``The Crucible''): Kept her senses while all around her were possessed by the Dark Lord of Ham Acting. Should be worth something.

(13) Lauren Bacall (The Mirror Has Two Faces): If there is anyone on the planet who does not want to see Bogie's Baby finally win an Oscar, get off Earth now.

(14) Juliette Binoche (``The English Patient''): Has done better work in French films, and most voting members have seen at least one of them.

(15) Barbara Hershey (``The Portrait of a Lady''): Admired performance by an admired actress, but it's in a movie that makes ``Larry Flynt'' look about as normal as ``Leave It to Beaver.''

(16) Marianne Jean-Baptiste (``Secrets & Lies''): Kept her senses while all around her cried their eyes out. In this case, though, the crybaby gets the attention.

BEST SUPPORTING ACTOR

(17) Cuba Gooding Jr. (``Jerry Maguire''): We showed him our money at the box office, now let's see what we can do on Oscar night.

(18) William H. Macy (``Fargo''): Smart-guy stage actor famed for work in David Mamet plays does astonishingly good work in pathetic-hilarious movie role as a car salesman turned kidnapper whose human temperature is colder than Minnesota's.

(19) Armin Mueller-Stahl (``Shine''): A formidable job in the dark, dual-sided role of a father whose oppressive family values nearly destroy his talented son.

(20) Edward Norton (``Primal Fear''): Norton kept us guessing in his galvanizing film debut as an altar boy suspected of murder, and he'll keep us guessing on Oscar night.

(21) James Woods (``Ghosts of Mississippi''): The bad-guy roles are the showiest ones, and in racist killer Byron De La Beckwith, Woods is scarily on target in one of the year's baddest roles.