This is almost a trick question. The short answer to your question is yes and no. Instead of being considered a realistic novel (which assumes the content is fiction), Paula should be considered a piece of nonfiction. This being said, as a piece of nonfiction, there are ABSOLUTELY elements of realism within it! In fact, as you will find out by the end of my answer, it is often considered a piece of nonfiction that is an apt example of magical realism! Let me explain this realism by using elements of Allende's style and begin with a very pertinent quotation from the novel:
This is the kind of detail that is forbidden in literature; in a book, no one would dare combine a full moon with Frank Sinatra. The problem with fiction is that it must seem credible, while reality seldom is.
The last sentence of this quotation is, of course, very important. Allende hits the nail on the head here. Paula is NOT a work of fiction. In fact, it is a real story. As a result, it should be considered realism and be credible. The irony is that reality, when written down, doesn't seem credible at all.
Most scholars believe that Allende's Paula looks a lot like her previous works of fiction because the style is the same: credible realism. The characters are described in the same way. Situations are presented in the same way. Events are revealed in the same way. Because this work of nonfiction resembles her fiction in style, critics began to point fingers.
Another irony is that Allende is known for basing almost all of her stories on encounters in her life even in her fictional novels. Culture and family and gender are always important to Allende whether she is writing fiction or nonfiction. Paula is no exception.
If women have influence, it is only—and then only sometimes—within their home. Men control all the political and economic power, the culture and customs; they proclaim the laws and apply them as they wish, and when social pressures and the legal apparatus are not sufficient to subdue the most rebellious women, the Church steps in with its incontestable patriarchal seal. What is unforgivable, though, is that it is women who perpetuate and reinforce the system, continuing to raise arrogant sons and servile daughters. If they would agree to revise the standards, they could end machismo in one generation.
Here we see Allende's ideas about both culture and gender and, further, how they relate to each other. There are also many historical events that are aptly described but the realism is muted a bit by Allende's own visions, ideas, and opinions of the events. Many Latin American literature scholars refer to this idea of "magical realism" as a way to deal with important and controversial social issues while veiling them in another way.
In conclusion, it is interesting that all of these ideas are framed by Allende visiting her daughter, Paula, as she lay in a coma for a year. The stories found within are the stories she told to Paula, hence the title. Even in the midst of tragedy, we can find realism.