The three points, courtesy of goals from Gabriel Agbonlahor and James Milner, lifted Villa above Liverpool into sixth in the Premier League table, three points behind Tottenham in the all important fourth spot.
It is a far cry from the end of last month, when Villa were thrashed 7-1 by Chelsea, who subsequently beat them in the semi-finals of the FA Cup.
O'Neill said: "We're in the mix. We're going for everything and guaranteed nothing. We're not even guaranteed to finish eighth in the league at this minute.
"We've gone above Liverpool with three games to go and that's pretty exceptional. But where I've been pleased with the team is they've responded fantastically to the defeat at Stamford Bridge.
"We've come back and taken 10 out of the last 12 points. I think the team has shown a great deal of character all season and I think that was epitomised tonight."
O'Neill felt his side were worthy winners, adding: "It was a very professional performance, and I thought we played very well, but at 1-0 the game's still in the balance and it was good to get the second goal, and we saw it through reasonably comfortably."
The last thing Hull needed was to hand their opponents the advantage but that was exactly what happened in the 13th minute as first Ibrahima Sonko and then Paul McShane saw their clearances charged down, allowing Agbonlahor all the time in the world to curl a shot into the top corner.
The hosts should have drawn level midway through the half but they could not take advantage of three glorious openings in a matter of seconds.
First Jan Vennegoor of Hesselink was denied by Brad Friedel, who then stuck out a hand to keep out a follow-up effort from Kevin Kilbane. The Irishman retrieved the ball and looked certain to score but smashed his shot against James Collins on the line with the goal gaping.
Steven Mouyokolo missed another golden chance at the start of the second half and it was Villa who grabbed the decisive second goal from the penalty spot in the 76th minute.
A speedy break ended with Milner being fouled by George Boateng and the England midfielder easily beat Matt Duke from 12 yards.
Hull boss Iain Dowie admitted it was the Tigers' frailties at both ends of the pitch that cost them again.
"It's a familiar story," he said. "The stats don't lie. We've outperformed Villa in every part of the game except what matters - goals. We've had more crosses, more shots, more corners but we've got to take our opportunities.
"There was a good response to going behind after an absolute joke goal and then we have the killer chances - fundamental turning points in games. We started the second half like a house on fire and then we gave away another schoolboy goal from our set-piece."
Hull are also waiting for news on striker Vennegoor of Hesselink, who was knocked out in a challenge with Richard Dunne at the start of the second half that resulted in a seven-minute delay as the Dutchman was treated.
He was taken straight to hospital and Dowie is expecting the 31-year-old to be detained overnight.
"He was out for five minutes so that's a real worry," added Dowie. "He's gone to hospital for a CT scan. We'll have to wait and see but he was looking in a fairly bad way. I think he was just conscious as he came off the pitch."