I'd like to put it like this, realistic characters (the one you play) is ruining games, it's increasing the difficulty as hell in many cases. As stated by Yahtzee "Whatever happened to health bars?"
What realism contributes, are good phsyics engines! The first really realistic one that got released was Rag-Doll (Oh how I love a dead body falling ten stories down from a building).
I will put down some examples to show you what I mean. Apart fro ragdoll, that's taken care of allready.
Battlefield: Bad Company. Semi fun game, but what kicks ass is to blow up walls and doodads, it just rox, call me "Haggard" but I can never get enough of revealing a snipers position with a simple Bazooka shot.
GTA IV: Living cities, take cabs, date, eat, bla. bla. you've all played it. You know what I mean, I dont know if there's a special engine implemented for the living town effect but it's still nice.
Assassins Creed: Climb Walls and buildings? HELLO?!
The best mix ever (in my opinion) would be a GTA IV living city and also as wide, with an awesome ragdoll engine, 90% destroyable houses, doodads and walls and the freedom of movement you get in assassins creed. At the same time, to make it a fun game, you would want an massive amount of ammo, explosives, guns, sweet ass AI and alot of health packs on the ground, no freaking shield generators.
One word: Awesome