I think that it all depends on the context that it's used. Obviously it's not going to look as realistic as an actual environmental background, but I think that sometimes it draws me into a film more than an actual one. Granted, this is almost always in regards to films made in the 60s or before, but an example I can think of is in Dr. No, where James Bond is in the cab and there's a green screen background. For me that helps to set the tone of the movie and makes me realize that this movie, although looking realistic, is in a completely different world than our own. So no, it's not more realistic, but I don't think it automatically takes me out of a movie.
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