Realism is an effect just like any other. I haven't seen Blair Witch Project or Cloverfield, but I imagine what they do is use the 'found footage' conceit to create a sense of immediacy that makes the horror or the monster all the more scary and exciting. Chronicle tries to do the same with superheroes and supervillains, with mixed results.
The problem is that the conceit doesn't have a lot of credibility through the film. The camera is set up too perfectly in each scene, and there often isn't a good explanation for that. This is distracting, and undermines the 'realism' the conceit is supposed to produce. What's disappointing is that the film didn't need to do that. It could keep the style, without having to continuously explain to the viewer why this character is filming at this time.
Because the style itself is great, I think. And applying it to superheroes is a great idea. I remember the giddy feeling I got when I saw Iron Man zoom through the sky in the trailer for the first Iron Man movie. Chronicle can match that feeling by putting you behind the eyes of the guy zooming around in the sky. It is AWESOME. The epic showdown at the end also thrills precisely because it's so realistic. In fact, by that point, the film abandons the constraints of the 'found footage' conceit, forgetting the cameras, hoping to distract its audience with all the excitement and emotion. It could have done that throughout the whole film and I wouldn't have minded.
So the film is a failure in formal terms. But I liked it, not least because it proved very knowledgeable about the genre, and crafted two origin stories that captured the best aspects of what superheroes can do. I also liked the little nods to established tropes -- such as training in Tibet to become a ninja, and swooping to rescue / the death of Gwen Stacy. What I liked most about it is that it was mean about nerds. This is what bugged me about Kick Ass (among other things). Chronicle understands that the shy guy in the corner can be just as conceited, violent and misogynistic as the jock or the bully. And nerds with power can be srsly scary people.