Lambert had expected to be up against his mentor when Villa take on Sunderland on Monday but last month the Black Cats sacked O'Neill and replaced him with flamboyant Italian Paolo Di Canio.
A storm surrounding Di Canio's political views greeted the appointment but a 3-0 victory over Newcastle in his second game turned the headlines in his favour.
Victory over Everton followed to lift Sunderland further clear of the relegation zone ahead of Monday's game, although a win for Villa would draw them level with the Black Cats and tighten the situation at the bottom once more.
O'Neill was a popular appointment at the Stadium of Light when he succeeded Steve Bruce last season following successful spells with Wycombe, Leicester, Celtic and Villa but Sunderland's struggles led to criticism that O'Neill's methods are outdated.
Lambert, who played under O'Neill at Celtic, said: "It's shocking. It's woeful. That's people who probably haven't been a manager calling him that.
"I worked for him for five years. He was a breath of fresh air at Celtic. He was absolutely brilliant. He took the club by the scruff of the neck, it was dead, on its knees and he got us to a European final and won us titles.
"That was tough because Rangers were a really good side in that era.
"He was brilliant. Him, (assistants) John (Robertson) and Steve (Walford) were brilliant.
"I have spoken to him since. I am pretty sure he will bounce back pretty quickly."