Much of the impact of “The Cove,” which collected the documentary feature Oscar on Sunday night, comes from underwater footage that could not have been captured without help from Lucasfilm spinoff Kerner Optical.Kerner runs a hush-hush “skunk works” that solves high-tech problems for private industry, government contractors and the occasional three-letter agency. Since Kerner’s expertise is in models, miniatures and camera engineering, many of those problems involve exotic cameras. For “The Cove,” which exposes the slaughter of toxin-laden dolphins for meat in Japan, director Louie Psihoyos needed HD cameras that could sit on the sea bottom undetected and record the events at the surface. Kerner production manager Kevin Wallace became “rock camera supervisor” for the movie. Wallace, who appears in the pic, said, “We tried to envision being there and tried to create something we wouldn’t be able to detect, and we felt if we couldn’t detect it, no one else would be able to either.” They placed Sony HD cameras that recorded to hard drives inside faux rocks sculpted from urethane, coated with epoxy and then painted to match surrounding rocks. Once in place, the cameras ran continuously. Each night the pic sent a team to collect the cameras and replace the hard drives, but the rock cameras were so convincing that they were hard to locate. “Sometimes they were a little warmer than the other rocks so we could see them on night vision,” Psihoyos said. Psihoyos remembered hanging from a cliff for hours at one point to avoid detection by the locals and realizing that “the guys in charge of the rock cameras are getting this amazing footage, and they’re asleep.” “We absolutely couldn’t have made the film without those cameras,” he said. Digital dilemma Oscar’s technical categories reflect moviemaking as it grew up in the 20th century, as an industrial process with specialists working more or less separately. The introduction of digital technology has blurred those specialties and has created quandaries for Academy branches and voters alike. Sunday’s results, though, suggest the Academy voters are adjusting to the new realities of digital filmmaking. Mauro Fiore won cinematography honors for “Avatar” even though he only worked on the live-action scenes, which made up about 30% of the movie. Backstage after his win, Fiore said, “I think it’s a pretty amazing thing for me to be honored in this capacity, especially because this is an HD film and this is the first time that a film has won that has so much computer generated images and live action together. So this is a huge revolution for the industry.” Besides cinematography, the Acad also gave makeup kudos to “Star Trek,” though digital cosmetic enhancement specialists Lola VFX was credited on the pic. Lola’s work on some pics has extended to fixing makeup problems on set. Oscar winner Barney Burman told Daily Variety that while he doesn’t believe his prosthetic makeup on “Star Trek” was digitally retouched, he thinks there’s slightly less concern about that happening. The critical thing, he said, is that artists are honest about who did what. “If it’s all clear and above board, then it’s a little more acceptable for us to judge it on what was really done.” Digital retouching is not a big issue for Burman because his goal is to create makeup that looks great for the director and producer seeing it on set. “If we can make it as beautiful to the eye it should read on camera. I don’t do makeup for the camera, because I’m never sure what the camera will see or not see. But I know the director and producer will see a living person 360, and I want them to be impressed.” Secret’s out Lowry Digital can now boast having worked on the past two vfx Oscar winners. Lowry, which helped remove any digital artifacts from “The Curious Case of Benjamin Button,” was also quietly engaged to work on “Avatar.” It was sworn to secrecy during most of awards season but was able to go public Tuesday with glowing quotes from producer Jon Landau. Lowry developed its software for film restoration and has adapted it to remove noise from footage captured with digital cameras. Former Moving Picture Co. CEO David Jeffers has joined London-based BlueBolt VFX as non-executive chairman. BlueBolt was founded by former MPC staffers Chas Jarrett, Angela Barson and Lucy Ainsworth-Taylor as a boutique vfx shop aiming at both feature and broadcast work. It has already delivered work on Warner’s “Sherlock Holmes” and Disney’s upcoming “Prince of Persia.” … Bow Tie Cinema will install Technicolor’s 3D-on-film system on 25 of its 150 screens in time for the release of DreamWorks Animation’s “How to Train Your Dragon” on March 26. Meanwhile Oculus3D, the new 3D-on-film solution from Lenny Lipton, the brain behind much of today’s digital 3D technology, has been giving demos of its system in Los Angeles. After the boffo box office for “Avatar” and “Alice in Wonderland” look for more announcements at or around ShoWest of theaters going to 3D-on-film, as exhibs decide not to wait for digital cinema deployment to collect the 3D up-charge on tickets.