What are some key differences between realistic acting and acting in Shakespeare? Do you really need to speak in iambic pentameter to be a good Shakespearean actor? Why are Laurence Olivier, Ian McKellan, Patrick Stewart, etc, some of the best Shakesperean actors? What makes them good at it?
Thanks!

Prospective, it would take pages and pages to answer your questions concretely. As far as shakespearean acting goes, it is vital that you learn iambic pentameter. The rhythm of the text is even more important than the text itself when working with shakespeare's language. The meter will help you learn the "operative words", and help guide you through the style of speech for it all to make sense. Now, Shakespeare didn't always use ba-bump ba-bump ba-bump ba-bump ba-bump (Iambic pentameter). He also encorporated trochee's, spondee's, feminine endings, cesura's, rhymed couplets, etc, etc, etc. A good Shakespearean actor knows the world of the character by utilizing the text to its fullest. Those who worked extensively at RSC and RADA have had amazing training in this style. The words of the text TELL you how the character is reacting. That is the beauty of Shakespeare. You're motivation is written right into the text. For instance, when you see the text written as such:

(taken from "The Merchant of Venice" Act 4 Sc.1 lines 173-180 [Bevington, "complete works of Shakespeare"])

Portia
Is your name Shylock?
Shylock
Shylock is my name.

-Take note the placement of the text. It is written so to indicate Shylock spoke directly as Portia finished her sentence, perhaps he even stepped on her line shutting her up.
-In this exchange, Shylock is in court, ready to take a pound of flesh from Antonio. He is anxious, and will answer any question quickly to get his winnings. He is ready. Portia is playing the role of the Lawyer. This simple question already shows his emotional state. As the lawyer, Portia see's this "anxious" state he is in, and prey's on it.

Portia:
Of a strange nature is the suit you follow,
Yet in such rule that the Venetian law
Cannot impugn (find fault with) you as you do proceed.-
You stand within his danger, do you not? (to Antonio)
Antonio:
Ay, so he says
Portia:
Do you confess the bond?
Antonio:
I do
Portia:
Then the Jew must be merciful.

Antonio is not quick to respond as Shylock was, he knows he made this deal, and he knows he can't pay up. Portia is using the quick response, possibly stepping right on Antonio's line, because she has a trick up her sleeve to negate Shylock's claim. At first glance, it is a great moment of suspense to lead to Antonio's reluctant answer. For the moment, it looks like she is using pressure tactics on Antonio, (this is all part of the wonderful mind of Shakespeare) but it is a trait that Shakespeare uses to indicate to the actor what "character" the role is calling for. (Portia is not herself in this scene, she is dressed as a lawyer)
When she gets the response she already knows the answer to, she quickly responds back with her conclusion.
The staggered text indicates haste. In this sense, it is a pursuit for answers, and conclusions...as would be in a court of law, even in modern times.
In some cases it represents haste in "one-upping" the character in dialogue for comedic effect, and sometimes in dramatic effect.
This is just ONE of thousands of examples that Shakespeare provides direction in his works.
Good Shakespearean actors can make the "heightened" language realistic, and make it flow as if it were natural. You can always tell when someone isn't comfortable with shakespeare. They are unfamiliar with Shakespeare's inside jokes, and style of writing.
There are great books on learning how to familiarize yourself with Shakespeare. You can really know the difference between winging it, and really knowing why he wrote everything the way he did. I think if one knows how to utilize shakespeare, they can put that work in contemporary approaches and strenghten what they can already bring to the table.

okaaaay, so for some reason, when I typed the text of the characters, it didnt start at the end of the line. Sooo, basically everything I wrote, won't make sense. (sigh)

Well, I'll try and hop on tomorrow and explain it when Im not busy at work.

Thanks avid, anyone else got some tips? Eh eh?

What makes a good shakespearean actor is how they utilize the text to make it sound natural. People assume shakespeare is this "heightened language", and in reality, it isnt. Yes, the words are important, and the speech pattern makes emphasis on words that we, in modern times, would place differently. I would whole-heartedly recommend picking up the John Barton videos on speaking in shakespeare. Wonderful info!
Shakespeare can really help out with learning modern works as well, thats why I appreciate him so much.
As far as getting used to shakes, you need to familiarize yourself with his work. Pick up a complete works if you don't already have one. Another really great book is Shakespeare a to z. It puts his words in modern language so you can understand what's going on. The most difficult thing with shakespeare isn't necessarily the rhythm, its the inside jokes he puts in the work. Sometimes, he even makes up words for better effect with humor. Ahhh, plawrights.