They had very little time to process things. One minute they think she's alive, the next she's a vampire. The confusion and shock was more than enough to stave off the grief till Willow entered. Different people deal in different ways. Also, the situation was absurd. If it had been in a dangerous situation they would have been mentally prepared (not in a ready to deal with way, but in a being afraid of something like this happening way) for it, and the shock wouldn't have been so great.
About Oz, well, if Earshot!Buffy was around I'm sure he wouldn't have been so calm. His immediate thought was that Willow wouldn't have wanted to be used to kill. It's almost like Wesley's reaction to Lilah's death in Angel; he doesn't show any emotion and goes to do what has to be done but inside he's tearing himself to pieces. We were just able to get a glimpse of that through Wesley's alone time in that episode, but I think the same idea can be applied. Oz was never one for expressing emotion, and a lifestyle of that doesn't just wash away at the death of a loved one. That's a Hollywood conciet. I thought his reaction was perfect.
Moreover, since there is no trick being played on the viewer, a drawn out grieveing scene really would be restrictive and wasteful of time. We know she's not dead, so we don't need to be made to feel worse about it. That's why they went for the shock.
You see it more in The Body. In that case it's Buffy's mother, but she doesn't break down. Dawn does, but she wasn't there. Giles is Giles. Xander does get all fist-shakey, but this is after time has passed and he has processed it. I'm sure he would have gotten to that stage with Willow if given the chance to get over the obscene shock of it all.