If that's the criteria then there would rarely (if ever) be a Best Picture... because truly flawless (i.e. perfect) films are few and far between.I don't think a film with 'flaws' deserves Best Picture...
The process is pretty simple, however. These are annual awards. Whatever the best in any particular category that year should get the award. End of story.
Out of the 10 films nominated, easy arguments could be made for about 3-4 of them having been the "Best Picture" of the year. And since I would consider THE HURT LOCKER one of those 3-4, I have absolutely no problem with it winning (especially over AVATAR, which wouldn't even make my Top 5). It's really that simple.
As far as snubs, yeah... INGLOURIOUS BASTERDS should have come home with more hardware (particularly Original Screenplay, at least). And DISTRICT 9 coming up empty is also disappointing. But you know what film was truly shut out this year? MOON. There's a film that was better than half of the Best Picture nominees. And that Sam Rockwell didn't even get a nomination is a near crime.