Palwick could have made the woman and the wolf distinct victims, but then the parallel between their fates might have felt too forced, too “unrealistically” coincidental. So having the woman in “Gestalla” be a werewolf is a more “concentrated” solution -- the story carries more emotional punch that way.
Gene Wolfe, in the introduction to Volume VI of Neil Gaiman's The Sandman, “Fables and Reflections,” writes regarding Gaiman's graphic short stories -- “What is important and central is that, time after time, the stories themselves are true.” For writers, this sort of mythic truth is more desirable than realism per se.
In Neil Gaiman's “The Hunt,” from the volume just cited, a grandfather tells his granddaughter a story about the Old Country – the rub of the story is that inter-marriage is inadvisable. Few of us can take that principle seriously nowadays – only the fact that we're dealing with a family of werewolves shocks us into considering the possible truth in what the man is saying, the idea it really might be perilous to marry somebody from too different a background... Of course, there's more to the story than that, and as the grandfather himself says, “You shouldn't trust the story-teller; only trust the story.”
My point is that any adequate definition of realism needs to make room for werewolves. Otherwise we might even lose Heathcliff. Here's one adequate definition, from Norman Mailer -- “Realism is not a direct appeal to the truth so much as it is the most concentrated form of fantasy.”
Which is to say that realism is best understood as one means to an end. James Wood in How Fiction Works calls this end “lifeness,” and writes that to achieve it, “the writer has to act as if the available novelist methods are continually about to turn into mere convention and so has to try to outwit that inevitable aging.”
By all means include werewolves then, provided they help you get your point across in a way that feels truly fresh...
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