Scotland manager George Burley had made some brave selection decisions, preferring Kenny Miller to talisman James McFadden up front and choosing Graham Alexander ahead of Paul Hartley as the holding midfielder.
Norway might have started the match bottom of Group Nine, but they now had their own national hero Olsen in charge.
The coach had not lost a home match in charge of Norway for 18 years and led his side to victory in Germany in his first game back in charge.
And, having sprung a surprise of his own by preferring Huseklepp to former Tottenham striker Stefan Iversen up front, his side started as he promised, being positive and lumping high balls to strike partner John Carew.
Burley insists qualification still on
But the Scots settled quickly and started to take control of the game, a moment of nervousness presenting the visitors with the first chance of the game.
A mis-hit clearance fell to Darren Fletcher, but the new Scotland captain fired well over from a difficult angle.
Another piece of poor control by Kjetil Waehler presented Miller with a chance in the six-yard box, but the Norway defender recovered in time to block.
However, the warning signs for the Scottish defence came when Steven Caldwell was lucky not to concede a penalty for a 27th-minute lunge that felled Carew.
Six minutes later, and only seconds after Gary Caldwell had picked up a booking for a tackle on Pedersen, he was dramatically sent off when referee Hamar adjudged him to have fouled Carew 30 yards from goal.
Scotland's misery was compounded when Norway defender John Arne Riise rifled the free-kick past Marshall with the help of a huge deflection off Scott Brown.
Caldwell was sent off for two quick, first-half yellow cards
Burley immediately replaced Ross McCormack with Christophe Berra in an attempt to shore up his defence.
But, on the stroke of half-time, Bjorn Helge Riise set up Pedersen, who guided his left-footed shot from 16 yards past the helpless David Marshall.
Marshall, who was preferred in goal to Neil Alexander in the absence of Craig Gordon, made a good save at the feet of Carew moments into the second half.
A bad day for the Caldwells was complete when brother Steven, also carrying a yellow card for pulling Carew's jersey, was replaced with McFadden moments after tempting fate with a foul on Pedersen.
The Scots momentarily looked like they might stage an unlikely revival, but Carew killed them off when he turned inside makeshift centre-half Alan Hutton, his shot struck both posts and Huseklepp turned the ball into the waiting net after 60 minutes.
It ought to have been four when an effort from Carew struck the underside of the crossbar and appeared to cross the line only to escape the eyes of the officials.
But Norway did add to their tally when Pedersen curled in a superb, in disputed, free-kick in the dying seconds as the Scots slipped to third in the table behind Macedonia on goal difference.
Norway: Knudsen, Hogli, Waehler, Hangeland, John Arne Riise, Bjorn Helge Riise (Skjelbred 84), Grindheim, Pedersen, Hoseth, Carew (Helstad 84), Huseklepp (Iversen 76). Subs Not Used: Jarstein, Reginiussen, Winsnes, Brenne.
Booked: Carew, Hoseth, John Arne Riise.
Goals: John Arne Riise 35, Pedersen 45, Huseklepp 60, Pedersen 90.
Scotland: Marshall, Hutton, Davidson, Steven Caldwell (McFadden 48), Gary Caldwell, Graham Alexander, Darren Fletcher, Commons, Brown, Miller, McCormack (Berra 37), Berra (Whittaker 78). Subs Not Used: Neil Alexander, Hartley, Maloney, Steven Fletcher.
Sent Off: Gary Caldwell (34). Booked: Gary Caldwell, Steven Caldwell.
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.