The Academy may believe it’s doing the residents of toontown a favor by adding a category dedicated solely to animated features. However, some industry insiders think this new wrinkle may prevent pics such as DreamWorks’ “Shrek” and Disney/Pixar’s “Monsters, Inc.” from being considered in the major races, such as picture and screenplay. No matter how the Oscar scenario plays out, however, both films are likely to land a few nominations in several categories.

DreamWorks has put almost all the studio’s promo efforts into pushing the likable green ogre, who has grossed more than $268 million at the U.S. box office. In addition to the animation race, the studio has eyes on the picture and adapted screenplay trophies, and has been aggressively promoting Eddie Murphy in the supporting actor category. In addition to being the first animated feature to land a prestigious Official Selection slot at the Cannes Intl. Film Festival, domestically, “Shrek” took home eight Annie awards from the Intl. Animated Film Society in November.

According to DreamWorks, the DVD version of the toon has sold more than 5.5 million copies since its release in November, overtaking “Gladiator” as the best-selling DVD of all time.

Disney’s holiday treat “Monsters, Inc.,” which also is doing extremely well at the U.S. box office (more than $230 million) seems to be going head to head with “Shrek.” Although critics contend that “Shrek” was the film with more crossover appeal, “Monsters, Inc.” once again proved Pixar is the leader in computer animation and has the critical edge when it comes to realistic depictions of hair, skin and clothing.

Factoring in the fact that both films had bright, catchy soundtracks (“Shrek” featured hip cover songs by the likes of Smash Mouth and Rufus Wainwright, while “Monsters” has the usual gem from frequent Pixar collaborator Randy Newman), the two big-hearted toons are likely to end up doing battle in the animation category. Their only real competition appears to be Richard Linklater’s imaginative “Waking Life” and the Paramount/Nickelodeon year-end arrival “Jimmy Neutron: Boy Genius.”