: Contrast Minecraft. Minecraft is as abstract as you can get, and
: photorealistic graphics would get in the way of it. Imagine killing a
: photorealistic cow in Minecraft. Now imagine that little steak jumping out
: of the cow. The animations wouldn't work either: swinging a sword is the
: same as swinging a pickax is the same as digging with a shovel in
: Minecraft, but not in a remotely realistic world.

You're talking physics now more than visuals. I mentioned in another comment - you certainly could have a photorealistic Minecraft. Real-world feasibility would be out the window (what world is made of blocks where steaks jump out of cows when you kill them by swinging a block axe in the air?). But wow it looks like a realistic block world!

Sure there is a crossover between physics and pure visuals (eg wind blowing through tree canopies), but then I take it back to cartoons - the ever growing realism in CG cartoon movies, both visually and in physics, even though 'humans' are clearly stylized and not realistic, to retain that 'cartoon' feel. It seems most CG film animators have given up trying to create human-like characters, and develop tools to form and animate cartoon-like characters within an ever improve visually realistic environment (shaders, effects, materials, environmental effects, yadda yadda). You can have realistic visuals and you can have realistic physics, and still maintain an abstract style or theme.
It's more like the question is, as a creator, do you really want to? I leave that to the game designers, cuz it's their game :)

: Sometimes, I wonder if Mass Effect would have been better if it was as
: stylized as some of the early concept art. There's a lot of times where
: the more photorealistic route they took falls flat because they didn't
: have enough animation to back it up.

Agreed. If you aim to go photorealistic, you basically set up an expectation that people think they will see. You lead yourself into an uncanny valley situation, where expectations don't match up with presentation. We never really had that problem in the past (low-poly Doom-era realism) where photorealism was an impossibility anyway. Imagination was still a heavy, heavy component in games where the game world was clearly representative of a real world.

: Half a liter of vodka. This will not be my most well-articulated post ever.

Well, it seems you typed well. So that's good :P