Villa were defeated in their final game of the campaign at home to Rovers on Sunday but finished sixth in the Premier League for the third consecutive year as seventh-placed Liverpool could only draw 0-0 at Hull.
That means O'Neill's side - who also reached the Carling Cup final and FA Cup semi-finals this term - will not have to play an extra round in next season's Europa League and the manager insists he is delighted with the campaign overall.
Villa ultimately fell short in their bid to break into the top four though and speculation continues to surround O'Neill's future.
Reports have suggested Liverpool boss Rafael Benitez could be on his way out of Anfield this summer, with O'Neill touted as the leading candidate to succeed him - while Croatia coach Slaven Bilic is the latest name to be linked with Villa as the Irishman's potential replacement.
O'Neill, who is set to meet Villa owner Randy Lerner in the next few days, moved to dismiss the speculation last week by stating his wish to stay at the club, but the 58-year-old admits his current squad needs strengthening if this season's achievements are to be matched.
"We would have to try and improve the team - I think even just to stand still, we would have to improve the team," O'Neill said.
"If you start to think everything is absolutely perfect, it's not. You look at those teams that you want to compete against.
"This season apart, Manchester United, Arsenal, Chelsea and Liverpool are contesting quarter-finals, semi-finals and finals of the Champions League, thrown in with the fact that they can hack it domestically. It is tough."
To push on, Villa will certainly need to retain the services of key men like England midfielder James Milner, who is one of several players at the club hoping to be included in Fabio Capello's provisional World Cup squad on Tuesday.
Milner is in line for an improved deal with Villa this summer, although O'Neill insists both he and the player are happy for talks to wait until after the tournament in South Africa has finished.
Asked if he was looking to get Milner to sign up quickly, O'Neill said: "No, I don't think that's important. I know James and his agent pretty well.
"If he comes back with the World Cup medal and the Golden Boot I might feel we should have done something!
"But he has been great and he is perfectly happy to sit and not worry about things."
Blackburn's victory, which came courtesy of Richard Dunne's 84th-minute own goal, moved them into the top half of the table.
A 10th-place finish speaks volumes for the work Sam Allardyce has done since taking over the club when they were in the relegation zone last season.
But like O'Neill, Allardyce feels it will be even harder to produce the same again next year and he is looking to sign a new striker as soon as possible.
"We'll have to try and find a frontman," said Allardyce, who hopes to finalise a deal for Portsmouth's on-loan Lens forward Aruna Dindane.
"It is our main area - I've made that public over the last few weeks, and let's hope we can clinch it as soon as possible.
"We can then look towards next season with a little bit more security and hope that if we are good enough to finish 10th now, then we should be good enough to get in and around that position again.
"But we have to be careful about how much everyone else spends first before we start predicting whether we finish 10th or better next season.
"If everyone else goes off and spends millions and millions more than us, 10th might be a difficult thing to do next year."
A major bonus for Blackburn this season has been the emergence of a crop of exciting youngsters, including Steven Nzonzi, Nikola Kalinic, Martin Olsson, Junior Hoilett and Phil Jones, who has particularly caught the eye in defence after an impressive league debut against Chelsea in March.
On Sunday, Allardyce fielded debutants in the form of midfielder Amine Linganzi and centre-back Grant Hanley, whose performance the manager felt rivalled that of Jones on his first Premier League appearance.
It promises a bright future at Ewood Park, although Allardyce is aware it could become increasingly difficult for the club to hold on to their young talent.
"They have asset values. We will always be a selling club now Jack (Walker, the former chairman) is not with us," Allardyce said.
"What we must do is hold on to these players for as long as we possibly can and develop them as much as we can.
"But there is no doubt that if they continue to play like they are, one day somewhere down the road we will have to resist somebody trying to get them off us."