I think it's less a matter of "can" and more a matter of "should."
Granted, if you mean literal photograph quality, no. Even if you can do it perfectly from a technical standpoint -- which should be totally possible -- you'd still have humans creating the art assets. Even the *best* realism painters can't get things looking photographic.
I think the biggest issue, technically, is light. Luminosity's sort of fuzzy and weird because it has nothing to do with the physical details of an object. You want realistic pores on all your characters? Fine. Just fiddle with bump mapping and up the poly count. No big deal. Lighting's harder than that though.
Lighting's also one of the hardest things when it comes to like, painting or drawing anyway.
Specifically, you can have animotronics and puppets that don't look very realistic, that get very uncanny valley, that just... get odd, but you can tell their physical objects. Again, it's the lighting. You can do a completely realistic 3D rendering of a person but the lighting's what'll give it away.
Personally I feel the main issue with lighting right now is that stuff looks too shiny in games. Actually objects are not that shiny. Like that one Medal of Honor game where everyone looked doused in vasoline.
Anyway. As for my original comment.
I don't think there's a lot of merit in getting super-realistic. The obvious reason is that it kind of looks boring after awhile. The less obvious aspect is that videogame designers have a very peculiar idea of what realistic looks like and assume it means making everything dark.
Reason two. If you compare movies to like, soaps or talk shows, movies are filmed on that film/with that framerate/fuck it I don't watch TV thing where they're a little blurrier, not quite as sharp, not quite as realistic looking. Stylistically I always assumed this was to give the film a sort of painterly effect. To make it look less real. I think the same principle works for videogames and as such you don't need the same level of super detail.
Reason three. Increasing details can make things really visually confusing. I'm pretty sure I've used this example before, but X3 and Frontier: Elite 2.http://www.mobygames.com/images/i/11/42/177342.png
<- X3 is very detailed but it's a greebley, visually confusing mess and I can't tell what the hell is going on.http://www.mobygames.com/images/shots/original/1178465496-01.png
<- FE2. Really simple, almost abstract graphics, but you can tell what you're looking at without having to think about it.
Of course, this isn't just realism that does this. As I've said before, I have a small TV and found certain levels in Odin sphere unplayable because the visual style in the game was just too busy for a TV that size.
Fourth. Okay. I think it takes a little too long to do hyper-realism. I think if the industry tends that way it'll possibly scare off new artists since hyper-realism is harder, too.
Third, it's a lot easier to fuck up realism and get something ugly looking than with more abstract visuals.
Seventh, stylistically you hit a point of diminishing returns. You're going to be putting in more effort but it's not going to look appreciably better. For instance, in Oblivion, everyone looks really fucking ugly despite being high-poly and detailed. http://content.playwhat.com/files/664/gothic2_7.jpg
<- gothic 2, on the other hand... people don't really look GREAT, but they're low poly, the game runs pretty fast and still looks nice, and the faces aren't completely vomit inducing.http://files.xboxic.com/xbox-360/the-elder-scrolls-4-oblivion/face-up-close.jpg
<- Oh and people have normal-colored skin in Gothic as well.
Also you can do stylized realism like with Twilight Princess and have wonderful results.
Finally, my video card sucks and I can't play a lot of modern games because of what I find to be completely superfluous visual details that don't really make the game look much better but DO make it run worse. Bloom, overuse of shaders, really high poly faces that look horrifying, etc. Back in the olden days there was more of an emphasis on efficiency. I don't want to say high-end video cards are making developers lazy because that sounds codgerly and I don't think that's true, but fuck, just since I've been talking about Exile a lot lately, there was a HUGE amount of effort put into being as efficient as possible with that.
had they tried recreating earth and humans, I think we might have had some issues.
Interesting point and I think it works. For another example, I think the aliens in ME2 look brilliant and that the humans look horrible. http://www.youtube.com/watch?v=yjIcFATxrus
I mean like here. Although I guess you can mess with your PC's face in that game so maybe the person changing the details just has some sort of fetish for thick-necked ambiguously black dudes that look like frogs.