Cue the dwarf in the blue tuxedo

The worst thing about Tom DiCillo's second feature is its title. Living In Oblivion is about an optimistic, but not overly bright independent film-maker (Steve Buscemi) shooting a movie called... Living In Oblivion. Buscemi's Living In Oblivion is a glum, disaster-ridden affair. DiCillo's Living In Oblivion, by contrast, is a jolly, good-humoured comedy about the snares of no-budget film-making, and how sometimes victory, or at least a watchable movie, can be snatched, miraculously, from the jaws of disaster.

The subject isn't new: directors have been drawn to it irresistibly, despite the myth that films-about-film-making always bomb. But DiCillo's movie takes a slightly unusual tack in that it's set not in Lotusland but in downtown New York, on a freezing winter's night.

DiCillo also took a novel approach to salaries: not only were the actors not paid but many invested their own money. But there are no passengers in the cast. Buscemi, with his hangdog loser's face, is a stalwart of the US indie scene: you may remember him as Mr Pink in Reservoir Dogs. Here he's allowed to display his flair for comedy as he wills each take, against all the odds, to be wonderful, or, with luck, to end without the focus slipping and the boom mike descending into the frame (most of these jokes aren't new, but DiCillo times them to a tee).

All the characters are well played and observed: the macho cameraman with his Che Guevara beret, goatee and eyepatch; the actress whose performance gradually and visibly falls apart as a series of bloopers force her to play and replay an emotional scene. There is a dream featuring a dwarf in a blue tuxedo, who proceeds to harangue Buscemi for using him in such a cliche (a sideswipe, surely, at David Lynch, for the dwarf-fantasy sequence at the start of Twin Peaks). And there is the vain and preening male star, whose ego outstrips his fame and talent.

Living In Oblivion began life as a short film and now falls into three discrete, but loosely connected segments; one of its pleasures is the way the themes and subplots come to fruition in the final reel. The film- within-the-film might be a shambles, but DiCillo keeps an iron grip on his own material.

Many thought that Beeban Kidron's To Wong Foo, Thanks for Everything! Julie Newmar was pipped to the post by Priscilla, Queen of the Desert: both send three colourful transvestites on a transcontinental car-ride and leave them stranded in the boondocks. But the tone of this film is quite different, cosier and less confrontational: it turns, somewhat incredibly given the hulking queens played by Patrick Swayze and Wesley Snipes, on the inability of the townsfolk to realise their visitors' true gender.

The three actors acquit themselves well, although John Leguizamo is the only one to look remotely credible in drag. But the film is slackly, sentimentally plotted. It's a fairy story in both senses: Priscilla Lite.

Kidron's film work has yet to match her television adaptation of Oranges Are Not the Only Fruit, about a young lesbian coming to terms with her sexuality - a subject that also propels Patricia Rozema's When Night Is Falling. Camille is a prim academic engaged to a nice-but-dull type. When her dog dies, she allows herself to be picked up in a launderette by Petra, a "performance magician". Petra works for an avant-garde circus. Her act includes a dance in which she holds a steam iron and wears hobnail boots. At the end, the dog is mysteriously resurrected and runs off, ears flapping in the wind. All that's missing is a dwarf in a blue tuxedo.

Exquisite Tenderness, we learn, is a medical term meaning "the point where pain reaches its most extreme" - a condition to which I came close while watching this coarse horror flick. It starts out as a Coma-style conspiracy thriller, but quickly degenerates. Carl Schenkel was once a moderately interesting director, but seems to have succumbed to the Michael Winner school of film-making, in which over-excited camerawork barely dispels one's impression that the script and indeed the movie were thrown together in five minutes. Despite prominent billing, Charles Dance's role mainly requires him to get his mouth sutured shut, and Malcolm McDowell disappears after a few scenes.

n On release from tomorrow