A good exegesis as to why Crash won and Brokeback lost, here. The two biggest reasons, I think, come down to the fact that the winner had a much better pre-Oscar campaign (a DVD in every pot, as it were), and that it took place in Los Angeles, and was thus easier for the working members of the Academy to relate. For all the sanctimonious twaddle and hype during the ceremony about what a precious and unduplicable experience seeing a movie "before a crowd of strangers" on "the big screen" is supposed to be, in reality, the race came down to the fact that the winner had been released on DVD months earlier, and its studio took full advantage to make sure that every possible person with a vote would have a copy long before screeners for the other candidates went out.

The other reason, dealing with the locale of the movie, is perhaps counterintuitive, when one realizes that in the first 76 years of Oscar, not a single film set in the City of Angels had ever won the top honor, and only a handful of films had so much as a scene set here. Now that we've had back-to-back winners, it's useful to see what it is the two last two films (Crash and Million Dollar Baby) had in common: they are both films that inhabit the real city, not some glamorous or mythical stand-in for same. Classic films that came close in the past were either period pieces (Chinatown, L.A. Confidential) or were films about Hollywood (most notably, Sunset Blvd. and Singing in the Rain); obviously, such films, while admirable on an aesthetic level, have nothing to do with the ups and downs of normal, everyday life here. Most of the Academy membership are not, by any stretch of the imagination, stars; they may have made a good living off of films, but they still have to inhabit the same universe everyone else does. People who are "stars" can afford the luxury of owning homes on each coast, while dissing the city as fake and superficial; the rest of us just have to make do, and perform the same mundane tasks as everyone else, like go to the supermarket, drive their kids to school, etc.

For the most part, Academy members do those things in Los Angeles, so any film that broaches the topic of what Los Angeles is, as a community, has an appeal. Since most of what "L.A." symbolizes to the rest of the planet is based on what non-Angelenos think, there becomes a dichotomy between the real city and "Hollywood", and it becomes a very rare thing indeed to see that "real city" on the big screen. Not having seen Crash, I can't say for certain whether that film succeeded in doing so, but I can see why it might have appealed to a member of the Academy who isn't making $50 million a picture (the fact that it was shot in the city, at a time of runaway production, no doubt also played a factor). For good or ill, provincialism is universal.