Reality shows reflect reality insofar as they use everyday people instead of actors to star in the shows, and that's where the reality ends. The environment that the show creates for these real people is completely superficial. Some reality shows are even scripted by professional writers, a fact which became blatantly apparent in a few shows during last year's writer's strike.
The reason that reality shows are so appealing, in my opinion, is that viewers can see real people like themselves become stars overnight and can easily emphasize with their desire to succeed. Other than that, the producers, directors, editors, etc. control every aspect of the show. You never know how the show's characters are going to act, but the editors can cut the film in such a way so that, for example, a person who is a complete idiot in real life seems relatively intelligent on the show, and vice versa. This editing is dictated by what producers know people will want to see, just like a work of fiction, which is, of course, not reality.
I don't think that it's possible for reality shows to ever perfectly reflect reality, even if you watch the house guests' every move on the 24/7 Big Brother feed. Even that environment is superficial as it's hardly unlikely that someone would be stuck in a house without any contact with the outside world for three months, crawl through gallons of honey in order to win control of the house for the week and eat nothing but an oatmeal-like substance that the show calls "Slop." This is all part of a game that is created by Hollywood, not by real, everyday people.
Even these real, everyday people, however, do not usually adequately represent the general population of actual everyday people. These people may not be actors, but they are hand-picked by the show's recruiters, who usually pick the people with the best bodies or most unique personalities, and especially those with a good mixture of the two. Picking real people would entail randomly selecting potential participants within a certain geographical area no matter what they look like or how boring they may be. I'm not a hundred percent sure that this particular selection process hasn't already been attempted, but based upon what I know the majority of the population really wants (beautiful and interesting "real" people), I'd be willing to bet that it hasn't been done or that it has failed miserably if it has.
Reality TV is an illusion, just like a fairy tale. The truth of the matter is: no one really wants to see reality as we already see it in our everyday lives. We want a fantasy that we wish was reality, just like a fictional TV program, and TV producers are more than willing to give it to us by making superficial people look real in an even more superficial environment. The term "reality TV" is a convenient mask that is placed upon these shows, and that mask is appealing to many.