Arma and America's Army definitely take the winning votes, but since I don't have a PC, when it comes to console games the most realistic I've seen are:
Rainbow Six: Vegas 1 and 2. The gun handling and recoil are off but most of the reloads are proper, and the round in the chamber is a nice touch.
Sniper Elite has proper bullet drop physics and decent gun realism.
The Call of Duty games made by infinity ward have been pretty good about recoil and reloading, they just don't have proper placement and the round in the chamber when they should.
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