Maggie Smith was clearly the fifth slot (one that might easily have gone to Woodward in Gamma Rays). The material is weak -- bargain-basement Auntie Mame -- and even the performance is not up to Smith standards.
The idea of super-coiffed Diana Ross playing Billie Holliday had seemed so outrageous upfront (like Tom Cruise playing Lestat), the mere fact that she performed acceptably caused critical inflation.
Tyson, mostly unknown at the time, was quite solid, and wouldn't have been a bad choice.
Ullmann was beginning her mid-decade reign as the foreign actress even American audiences knew. At the time I gave her my personal prize, partly because I'd already gone for Minnelli in '69, and partly out of a 21-year-old's desire to avoid the obvous choice.
But, sure, Liza, in a movie that as much defined cinema for me in the 70s as any other. Her singing is of course divine, but even just as an actress she does things with a level of subtlety seen nowhere else in her career (credit Fosse, who achieved a similar feat with Valerie Perrine two years later).
Italiano, you're correct that the histories suggest it was a close race, but sometimes (like with last year's American election) you shoudln't believe the insider reporting, which tends to recycle its own bullshit. It's true there was some groundswell for Ullmann, who got a Time Magazine cover (back when that actually meant something) in early autumn, was boosted anew by the December NY opening of Cries and Whispers, and won the Golden Globe. But, for god's sake, she couldn't win four years later when she was the most famous foreign actress since Sophia Loren; how was she going to triumph as a newly-famous actress speaking Swedish?
As for Ross...I read plenty of accounts afterward that she had been the shoo-in until Berry Gordy pushed the campaign too hard. I think this was a case of publicists talking to one another and convincing themselves of non-reality. Ross was a film neophyte in a moderately successful, critically-middling film. Minnelli was a daughter of industry royalty, on her second nomination, in a film that came damn close to winning best picture. I never had a second's doubt she'd emerge victorious.