> How about, say, volumetric fog? ;-)
>
> I have yet to see any GPU of any description get that right...

A couple of papers show how to do realistic physics-based smoke/cloud true 
volumetric effects (not just static fog):

http://developer.download.nvidia.com/presentations/2007/gdc/RealTimeFluids.pdf
http://www.markmark.net/dissertation/harrisDissertation.pdf

Also real-time volumetric lighting is no problem, in fact Crysis uses it and 
I'm sure there's an nVidia demo kicking about somewhere.

> For that matter, I've yet to see any GPU do physically correct reflections 
> [although surely it can't be *that* hard?],

The reason there is no effort put into doing this is because doing the 
reflection/environment map method is good enough.  In fact with DX10 and 
recent cards the emphasis has gone into speeding up the generation of the 
environment map.  Doing physically correct reflections is hard because you 
need to write a ray tracer inside the pixel shader - it's *a lot* of work 
for very little improvement in realism, which is why hardly anyone bothers, 
unless you are writing some proof-of-concept demo.

> nor global illumination that isn't pre-computed [and hence won't change 
> when objects move around].

http://realtimeradiosity.com/demos/

Real time ambient is done in the "Cascades" demo from nVidia.  Each voxel on 
the surface traces out (32 IIRC) rays to work out the GI at that point.  OK 
so it's not perfect (other geometry doesn't affect it) but it's certainly 
better than no GI.

What you have to bear in mind with all these things, is that they have to be 
designed to work when a frame takes 15 ms to render.  If reducing the 
accuracy by 10% speeds up rendering by 50%, the speed-up option is taken. 
Always.

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