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Yeah, the Oscars are really self-congradulatory, but without them a lot of great films would have never been made, and every Hollywood film would have the same mentality as the big, dumb summer blockbusters. Every industry has awards which the industry as a whole gives to their "best" things - nothing wrong with the film industry being the same way (though I wonder how come there are about 1000 movie awards given out by various people...)
As for your kids thing, that's reliable for certain kinds of films, but not others. Most kids have neither the intelligence nor the patience to appreciate or enjoy a lot of films that are aimed at older audiences, and kids will often truly enjoy certain films that adults simply don't "get". (of course, it can be said that it's harder to enjoy any film when there are a lot of little kids around, but I digress...)
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