Despite the hype over whether Eminem‘s The Marshall Mathers LP would take home album of the year honors, the rapper’s angry disc lost out to aging rockers Steely Dan, who up until Wednesday night had never won a Grammy.

The duo snagged album of the year for Two Against Nature, their first album in nearly two decades. They also won best pop album and best pop performance by a duo or group for “Cousin Dupree.”

They seemed as surprised by their victory as anyone.

“I thought Eminem was going to win,” Steely Dan’s Walter Becker said backstage.

Eminem did win three awards, in the rap categories. Also taking home three trophies apiece were Irish rockers U2 and crossover country singer Faith Hill.

Over the past several years, the Grammys – criticized for ignoring artists in their time – have tried to bring the nominations in tune with critical tastes.

Recording Academy President Michael Greene had trumpeted the 28-year-old Eminem’s nominations as a sign that the academy was more in tune with today’s youth and was not the “Grannies,” as the awards have derisively been called.

“We can’t edit out the art that makes us uncomfortable. Remember, that’s what our parents tried to do with Elvis, the (Rolling) Stones and the Beatles,” Greene said before Eminem took the stage with Elton John for the awards show’s final performance. Afterward, the two musicians embraced onstage.

Outside the ceremony, about 100 people from women’s and gay-rights groups demonstrated against Eminem. John, one of music’s most famous gay celebrities, was criticized for joining the rapper onstage.

Their performance of “Stan,” Eminem’s darkly gripping song about a deranged fan, also tested CBS censors. At least three curse words could be heard during the performance.

Much of the focus before Wednesday’s three-hour telecast had centered on Eminem’s lyrics, which refer to gays in derogatory terms and depict the murder of his wife and rape of his mother.

The musician, who has said his lyrics should not be taken literally, alluded to the controversy when he collected his award for best rap album.

“I want to thank everybody who could look past the controversy and see the album for what it was – and for what it isn’t,” he said.

Actually, while Eminem’s lyrics drew the attention, Steely Dan’s Two Against Nature had some controversial themes of its own, with songs touching on incest and pedophilia.

Among U2’s three Grammys were the prestigious song and record of the year awards for “Beautiful Day.”

“It’s a very unique emotion I’m feeling right now. I think it’s called humility,” U2’s Bono said as he accepted one of the awards. “I’m completely not used to it.”

‘s Voodoo won best R&B album and his song “Untitled (How Does It Feel)” won best male R&B vocal performance. Destiny’s Child‘s “Say My Name” won best R&B song and best R&B performance by a group.

Hill’s “Breathe” won best country vocal performance, and her duet with her husband, Tim McGraw, won best country collaboration with vocals. She also won best country album.

“I cannot believe this,” Hill said. “I would like to thank my mom and dad for allowing me to go to my first concert when I was 8 years old to Elvis Presley.”

Among the night’s losers was Madonna, who opened the show with a glitzy performance of “Music.” The new mother and wife was shut out of the three categories she was nominated in.

Also going home empty-handed was boy band ‘N Sync, which had last year’s best-selling album with No Strings Attached.

There were 100 Grammy categories this year. Unlike last year, when Santana walked away with a record-tying eight awards, there were no sweeps.

Dr. Dre and Destiny’s Child led all nominations with five each; Dr. Dre picked up the Grammy for best producer.

Jennifer Lopez, who provided the Grammys most memorable moment last year with her navel-plunging Versace dress, was not present, but the spirit of her dress lived on in Toni Braxton‘s eye-popping silver Richard Tyler getup. Program host Jon Stewart joked that Braxton was wearing his lost scarf.

Stewart also provided plenty of off-color laughs for the crowd, poking fun at everything from Sean “Puffy” Combs’ legal troubles to Eminem’s sexuality.

But the host suddenly found the joke was on him when a mysterious man dressed in cowboy attire bounded on stage immediately after a commercial break and shook his hand.

“I just wanted to congratulate him,” the man, who identified himself as Howie and said he worked for a Colorado radio station, said as security guards hustled him away.