The French Champions demonstrated exactly why they have such a huge reputation across Europe, and why they have won six consecutive French Championships, for they were truly superb at times - yet equally had it not been for an astonishing miss by Jean-Claude Darcheville in the 79th minute when the score stood at just 1-0 then the game would surely have had a different outcome.
It all ended in tears however for both Rangers and Darcheville, who was red-carded for a stamp on Kim Kallstrom in the final minute by Slovakian Referee Lubos Michel.
The referee had taken charge of two previous Champions League games involving the Ibrox club, namely the 0-2 defeat at Valencia in Season 1999-2000 and the 2-2 home draw with AS Monaco the following year as well as a certain UEFA Cup Final in Seville in 2003 and Scotland's 0-6 humbling at the hands of Dick Advocaat's Netherlands six months later.
Manager Walter Smith made three changes from 1 December with Sasa Papac, Brahim Hemdani and Daniel Cousin replacing Steven Naismith, Jean-Claude Darcheville and Kris Boyd against a Lyon side that likewise showed three changes from the side humbled in the Stade Gerland on 2 October - Francois Clerc, Hatem Ben Arfa and Jeremy Toulalan replacing Mathieu Bodmer, Milan Baros and Anthony Reveillere.
For some unaccountable reason Rangers wore all-white, yet they started positvely, although it was Lyon who created the first opening in three minutes when Sidney Govou shot into the side-netting from a Juninho pass.
Six minutes later Juninho's 25-yard free-kick was turned wide by Allan McGregor.
The opening goal was merely delayed however - Govou netting in fifteen minutes when Karim Benzema's cutback was turned into his path by McGregor, who was culpable in that he had no need to make contact with the ball at all as it flashed across the face of goal.
Suddenly it was an entirely different game - yet five minutes later Rangers might have levelled matters when Steven Whittaker cut in from the right before unleashing a right-foot drive that was beaten out by Lyon goalkeeper Remy Vercoutre, who then held Sasa Papac's shot from the rebound.
Alan Hutton was yellow-carded in 22 minutes for a foul on Govou, a booking that will leave him suspended for Rangers' next European fixture.
The remainder of the first-half saw Rangers held at bay by a Lyon side who were comfortable in possession and in control of the game.
Realising that changes were required if Rangers were to claw their way back into the game, Walter Smith replaced Cousin with Naismith at the interval, and the Ibrox men restarted very much on the offensive.
Alan Hutton came agonisingly close to an equaliser four minutes after the restart when his hanging cross was misjudged by Vercoutre, the ball being cleared off the line by Anderson.
Rangers had now stepped up the pace and were exerting considerable pressure on the Lyon goal - yet the French Champions remained dangerous on the counter-attack, highlighted when Juninho struck the crossbar with a 22-yard free-kick in 56 minutes.
Kevin Thomson was agonisingly close with a wide-angled drive that was deflected wide of the target, yet was inches away from connecting with the inrushing Naismith in seventy minutes.
Sasa Papac was replaced immediately afterwards by Darcheville, and the striker almost made an immediate impact two minutes later when Vercoutre's kick-out went straight to the Frenchman who quickly squared to Lee McCulloch whose twenty-yard drive was beaten out by the Lyon 'keeper.
Karim Benzema had a golden opportunity to seal the win for Lyon in 78 minutes when he was clean through on goal courtesy of a Whittaker error - somehow after rounding McGregor he saw his shot cleared off the line by the backtracking Whittaker, then his effort from the rebound blocked by the Ibrox goalkeeper.
If that was an escape for the home side, it was nothing to what followed as Rangers broke at pace with Barry Ferguson's penetrating run taking him through the Lyon defence on the right, his cutback finding Darcheville unmarked no more than five yards out in front of an open goal. Somehow Jean-Claude blasted the ball onto the crossbar and over - and the dream of the last sixteen of the Champions League soared into the night sky with it.
It was an appalling miss - arguably on a par with Willie Johnston in the 1971 Scottish Cup Final, Ally McCoist in the San Siro 1984, and of course Peter Van Vossen at Celtic Park in 1996.
It was also a miss that would cost Rangers dear - for in 84 minutes Lyon went 2-0 up when Fabio Grosso's long free-kick was misjudged by Carlos Cuellar, allowing Benzema to run through and stroke the ball home through the legs of McGregor.
Three minutes later it was three when that man Benzema sent a low thirty - yard shot flashing home with McGregor floundering.
The roof was falling in on Rangers - and Darcheville rubbed salt in the wounds when he was red-carded in injury time for a stamp on Kallstrom.
Afterwards a crestfallen Walter Smith reflected:
"The first goal left us open to the break. We controlled the second-half, but lacked a cutting edge tonight. Lyon defended very well. The UEFA Cup is no consolation."
RANGERS McGregor; Hutton, Cuellar, Weir, Papac (Darcheville 70); Whittaker, Ferguson, Hemdani (Boyd 83), Thomson, McCulloch; Cousin (Naismith 45) UNUSED SUBS Broadfoot, Carroll, Adam, Faye
OLYMPIQUE LYON Vercoutre; Clerc, Squillaci, Anderson, Grosso; Juninho (Baros 83), Toulalan, Kallstrom; Govou (Reveillere 76), Benzema, Ben Arfa (Bodmer 66) UNUSED SUBS Belhadj, Roux, Remy, Keita
REFEREE Lubos Michel (Slovakia)