I think I have seen a couple works of art here that are practically as photo realistic as pixel art can be, given that pixel art is limited in colors and minimal anti-aliasing.

This is one I know of by Newt:

http://pixeljoint.com/pixelart/87575.htm

I'm currently working on a photo realistic Coca Cola can:

I basically did a color reduced pixelated resize of a real image, which is on the left, and used it as a reference for shape and the color pallet.

EDIT:

Here is the finished product: