The two clubs face-off in the Carling Cup and O'Neill told Villa's website: "I said it some time ago, that I think the job he did at Birmingham was fantastic.
"To fight back that year after they had been relegated was particularly good, because I think that is exceptionally difficult.
"Alex (McLeish) has also done it and I think those achievements are great. When you get relegated to bounce back again is particularly difficult.
"You know you have to go through those few months of uncertainty but you keep going. So, in terms of Steve's efforts to get them up I thought was excellent.
"He's gone on, he did very well at Wigan and now he's got a team with great support and a decent budget and I think he'll make the sort of progress he'd expect of himself."