This is a match that will enter Rangers legend, so it is apt to start by dispelling a myth. Dougie McDonald did not walk down the Parkhead tunnel yesterday, ball in hand, and morosely greet Billy McNeill with the words: "We who are about to die salute you, Caesar."

The referee could have been forgiven for morbid thoughts as he approached an Old Firm derby in the wake of a series of refereeing controversies. He survived, if only just.

He was correct in the big decisions, if forgivably fallible on some of the smaller ones. Walter Smith may disagree, but Daniel Cousin's sending off was justifiable. He was a serial offender in his bruising battle with Gary Caldwell. He had been warned, he had been booked, he had to go. The assembled masses know now the English translation of Jan Vennegoor of Hesselink. In Glesca patois it means daft big tube. His kick at Kirk Broadfoot was one of those moments when one despairs of the ability of players to think and move and the same time. The referee had to award the Dutchman a red card.

So McDonald lives to draw another breath for a peep on his whistle. And so does Mr Smith. Yet, at first glance, his team sheet looked like a cry for help, if not a suicide note. Why would one pick Charlie Adam when Kyle Lafferty, signed for £3m of a restricted transfer budget, is available? And Cousin was in such deep cold storage he had to be placed in the microwave before serving. Both rewarded the manager's selection. Adam was competent, particularly in restricting the threat of Andreas Hinkel's forward runs.

Cousin was immense. He has been placed in the cliche box marked non-trier. Yesterday he was so belligerent he was Govan's Genghis McKhan. He showed pace, awareness and aggression. His goal was superb, shrugging off Mark Wilson before beating Artur Boruc at his near post.

However, the life lesson at Celtic Park was more profound than a competent refereeing performance or the return to form of a striker.

Or two, if one includes Kenny Miller's almost predictable breaking of his scoring duck.

This was the best performance by Rangers in possession since the return of Smith. It extracted a result that simply could not have been foreseen when the team went in level at half-time. There were periods in Lyon and in Lisbon during Rangers' UEFA Cup run when the Ibrox side seemed quietly assured on the ball. This was surpassed yesterday. In the heat of an Old Firm battle, Rangers passed slickly and, in the second half, with an undeniable menace.

Pedro Mendes was central to this ambition to outplay Celtic at the champions' own game. He was the outstanding player on the park. His goal showed that nobody at Celtic Park seems to watch Match of the Day. Mendes struck the ball into the net from a corner so surely that one might believe he has done it before. He has.

The Portuguese midfielder should have been marked or, even, closed down. However, he was irresistible for the rest of the afternoon. Mendes is not just a good passer. He always creates an option for his team-mates by constantly showing for the ball. He was not perturbed, either, by the pace of the game. This was an excellent Old Firm debut but the display by the Portuguese internationalist has a deeper significance.

Smith, who has been castigated for sterility, has promised more flair. Four goals at Celtic Park is a giant step on that road. The manager was almost reckless yesterday. If Cousin and Adam were surprise selections, the 4-4-2 set-up was almost stunning for a manger who surely would have taken a draw before the start of proceedings.

Miller and Cousin more than franked the viability of the formation, but it was in midfield where the greatest transformation was seen.

Mendes was aided by Steven Davis, whose industry also benefited Kirk Broadfoot when the full-back was under pressure from Aiden McGeady. Kevin Thomson, still not totally convincing, slowly progressed from the daftness of an early booking to spells of quiet competence. The return of Barry Ferguson should provide Rangers with a midfield of strength, purpose and guile.

Of course, Smith will still be pursued by one question: why did he not sign Mendes earlier? That is for another day, however. Last night was reserved for unrestrained celebration by Rangers fans. Gordon Strachan, in contrast, was seen at the bar putting in an order for a pint of draught hemlock.

McDonald and Smith had walked away from the car crash that is the Old Firm derby. Strachan was decked by a runaway truck. Celtic fans will hope he has got its number.