Susan Palwick's story “Gestella” can be found in her collection The Fate of Mice. It's a very realistic portrayal both of the ways men mistreat women, and of the ways men mistreat wolves.
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...
For my part, I cannot convince myself that the roof of Bletchley station is more "real" than the clouds. And as an artefact I find it less inspiring than the legendary dome of heaven. The bridge to platform 4 is to me less interesting than Bifröst guarded by Heimdall with the Gjallarhorn. From the wildness of my heart I cannot exclude the question whether railway-engineers, if they had been brought up on more fantasy, might not have done better with all their abundant means than they commonly do.
Fairy-stories might be, I guess, better Masters of Art than the academic person I have referred to.
Much that he (I must suppose) and others (certainly) would call "serious" literature is no more than play under a glass roof by the side of a municipal swimming-bath. Fairy-stories may invent monsters that fly the air or dwell in the deep, but at least they do not try to escape from heaven or the sea.