Graphically, full realism (Assassin's Creed III, Halo 4, etc.) shouldn't be a bad thing for Zelda. Would it be different? Yes, as Zelda's always basically been an anime in terms of visuals. But as Ventus said, full realism has worked for all kinds of fantasy adventure games (Darksiders, Skyrim), so there's no saying it couldn't work in Zelda. I would prefer more the anime-style (Final Fantasy Versus XIII) for Zelda, at least for now, but full realism graphically shouldn't be a huge concern.
Gameplay-wise, enhanced realism is probably a good thing for Zelda. Remember, Link is our connection to the game world, and The Legend of Zelda is (meant to be) centered around exploration. Deepening immersion and consequences is a good way to make us feel more into the game. But as a lot of others have said, realism cannot dampen gameplay. You'll notice we don't actually bleed when the main character gets shot in Call of Duty, Link doesn't require a week in the hospital after drinking expired potion in Zelda, and Mario's coin total isn't limited to how much he can stuff in his pockets. When realism clearly conflicts with gameplay and it becomes inconvenient, you've gone too far, and it's time to cut back.
JuicieJ mentioned how guns in Far Cry 2 can jam. I'd actually approve of that game mechanic, but by the sounds of things, it wasn't implemented smartly. Similarly, in Zelda, I'd approve of things like keeping track of hunger and thirst, gaining a good or bad reputation that follows you around, and enemies reacting differently to having certain parts of their bodies attacked. If done smartly and these changes enhance the gameplay rather than hindering them, they could help sell the next Zelda game. Having Link die if he doesn't eat something every ten minutes would be annoying, but perhaps if you modified the concept so Link just performs poorly without adequate nutrition... There are a lot of ramifications about those concepts, and it might be best if separate threads were created for them. Still, enhanced realism should generally be a good thing for Zelda.