LOS ANGELES — Hollywood picked the right decade to go over the rainbow.

In an era that brought harsh reality home with the war on terror and an economy gone bust, Hollywood became more of a dream factory than ever, embracing fantastic escapism at a time when audiences needed it most.

Though key fantasy franchises such as "The Lord of the Rings" and "Harry Potter" were in the works in the late 1990s, the films began arriving just months after the Sept. 11, 2001, terrorist attacks. The respite they offered lasted just a few hours, but who wouldn't want to take a detour to Middle Earth or Hogwarts and forget about the messy state of our own world for that brief time?

Fantasy, science-fiction and superhero sagas have been around since the early years of film, with "Batman," "Superman" and "Flash Gordon" serials, and such classics as "The Wizard of Oz."

But escapism during the Depression and World War II mostly came in the form of breezy comedies or glossy musical romances.

The past decade solidified the fan boy as Hollywood's key audience, with the final installments of George Lucas' "Star Wars" chronicle joining comic-book heroes (Batman, Spider-Man, the X-Men), toy stories ("Transformers"), and revived franchises ("Indiana Jones," "Star Trek") to produce a succession of colossal opening weekends.

Teenage girls got their own mega-franchise as the supernatural romance "Twilight" and its sequel, "New Moon," made pretty boys out of traditionally monstrous vampires and werewolves.

Computer animation, pioneered in the 1980s and '90s, reached new heights with such cartoon smashes as DreamWorks' "Shrek" flicks and Pixar Animation's stream of critical and commercial favorites, among them "Finding Nemo," "Up," "WALL-E" and "Ratatouille."

Live-action filmmakers reinvented visual effects with dazzling digital worlds, from Peter Jackson's Academy Award-winning finale for "The Lord of the Rings" to James Cameron's "Avatar."

Actors reinvented themselves, too, among them Johnny Depp, who went from that box-office-poison guy who makes weird little arthouse films to one of Hollywood's most-bankable stars with his "Pirates of the Caribbean" franchise.

Robert Downey Jr. emerged from pariah status as a substance abuser to become an unlikely fortysomething superhero in the blockbuster "Iron Man" and a rare Oscar nominee for broad comedy in "Tropic Thunder," closing the decade as the world's greatest detective in "Sherlock Holmes."

With an Oscar nomination for last year's "The Wrestler," Downey's "Iron Man 2" co-star Mickey Rourke also is on the cusp of a second career after squandering his early promise with bad-boy behavior that made him practically unemployable in Hollywood.

Still in purgatory are Mel Gibson and Tom Cruise, major stars who fell from grace with bad, or just plain weird, behavior.

After Gibson made the crucifixion a blockbuster spectator sport with "The Passion of the Christ," he alienated fans and colleagues with an anti-Semitic tirade after a drunken-driving arrest.

Cruise baffled people as he proclaimed his love for Katie Holmes by jumping on Oprah Winfrey's couch like a giddy schoolboy, then angered fans with anti-psychiatry rants and other Scientology preaching.

After her divorce from Cruise, Nicole Kidman broke out with the supernatural sensation "The Others," her radiant musical "Moulin Rouge!" and an Oscar-winning performance in "The Hours."

Diversity finally came to the Oscars, practically a whites-only affair the previous 70-plus years. In the last decade, six black actors — including Denzel Washington for "The Hurricane," Halle Berry for "Monster's Ball" and Jamie Foxx for "Ray" — received Oscars, matching the number who had won from 1927 to 1999.

Hispanics also made progress with acting Oscars for Penelope Cruz for "Vicky Cristina Barcelona," Javier Bardem for "No Country for Old Men" and Benicio Del Toro for "Traffic."

Ang Lee pushed the awards envelope for Asians, winning the best-director prize for the gay-cowboy romance "Brokeback Mountain" and scoring a best-picture nomination on his martial-arts epic "Crouching Tiger, Hidden Dragon."

"Brokeback Mountain" lost best picture to the ensemble drama "Crash" in one of the biggest upsets in Oscar history. Gay drama did score a victory, however, with last year's "Milk," earning Sean Penn his second best-actor honor, this one for the title role as gay-rights pioneer Harvey Milk.

Heath Ledger, a best-actor nominee for "Brokeback Mountain," was the subject of high drama at the Oscars as his parents and sister accepted his supporting-actor trophy for "The Dark Knight" last February, just over a year after his death. It was only the second time an actor won an Oscar posthumously.