To me, the natural way to try to make juggling "look right" is when characters have obvious hit states that control their reactions. Crushing people to the ground with leaping blows, causing them to spin out after hitting them with a strong blow / counter hit, or grappling them in a way that naturally flows with the motion (like the Air-Juggle grapples in DOA), helps illustrate a natural, sensible flow of action better.
It's a good mix of gameplay clarity, that simultaneously limits the "jabs that juggle for days" hokey-ness that Netherrelm games do.
But the reason crazy hit-states and "unrealistic" juggling sticks around, is the same reason why 2D plane-style characters and heavily key-framed motions stay in fighters; it makes it easier to tell what in the world is going on.
And this... just works. It works so well that you'll often see people try and figure how to bring the unrealistic moves into action movies, TV shows, or try to get the feel and impact of 2D motions in games that aren't limited to a flat plane. Characters in fighters could have 100s of reaction motions, just like an Uncharted. But it wouldn't add anything; most players would probably find it detracting from the experience. "Realism" doesn't play well with the skillful play people want from fighters. Mechanical stats like hitstun, recovery frames, start-up, and hitboxes are some of the furthest things from realism possible.
And the further you go down the "realism" rabbit hole... the more you have to make other things "fit" what's being presented. Imagine all the things "out of the players control", that a realistic fighter could / should take into consideration?
- Traction on the ground.
- Wind direction effecting strength of impacts.
- Cloth that actually gets hung up on a characters own body, delaying, slowing, and stopping attacks.
- Attacking characters getting limbs stuck in opponents clothes.
- The use of dangling cloth and hair to pull opponents back in, or pin them to walls / floors.
- Broken objects hurting the fighters, throwing off their footing, possibly killing them.
- Light possibly blinding characters, or hiding attacks from victims.
- Projectiles and elemental effects interacting with the world, and causing the area to change randomly every battle. (Imagine the stage burning down during a long set of fights?)
- Potential of Fatigue setting in.
- Injuries, tired limbs, useless limbs, unreasonably long stagger and dizzy states.
Personally, I wish some of this stuff made it into more modern fighters. But I think it'd be a wholly separate genre from what 2D gameplay fighters are. We'd get some weird mega-mix of features from Powerstone, Tao Feng, Virtua Fighter 3, Bushido Blade, and stuff that really is never done in any games at all.
The game would probably have 4 characters, go for a premium price, and never make back what it took to get so many intricate systems working...