Museum anthropologist (and former Ancient Egyptian Hieroglyphics TA) here--it was very much an intentional style! In Ancient Egyptian thought, images, sculptures, and other forms of art had magical power--statuettes of servants ("ushabtis"), for example, were placed in tombs with the thought that these sculptures would magically turn into real, living, breathing human servants in the afterlife, who would take care of the tomb owner. You know that painting of a pipe, with the words "This is not a pipe" above it? Yeah, for the Egyptians, the painting would say "this painting of a pipe is very much, definitely, magically, an actual pipe."

Because images /were/ the thing they represented, artists actually took great care to render things realistically; they just had a different definition of what "realistically" meant. If an artist today wanted to realistically draw, say, a table laden with food, they would use perspective and foreshortening to give a sense of depth and "realness." To an Ancient Egyptian, however, perspective and foreshortening would actually distort the table, food, cups, bowls, etc., so that they would no longer have the basic shape of a table, food, cup, or bowl. Therefore, if a foreshortened drawing was going on a tomb wall, the table that appeared in the afterlife would be foreshortened--distorted--as well, and not very useful as a table. In order to show that a box was filled with necklaces, each necklace was draw floating above the box, but as if it were lying flat in the box--if you didn't draw the things that were supposed to be in the box, they wouldn't actually be in the box.

The same thing holds true for representations of people. If you were to draw a full-on view of a face on a tomb wall, your soul in the afterlife would have a squash, flat face that wouldn't be very recognizable as a human face. But Ancient Egyptians thought that the human /profile/ was much more recognizable, and therefore, profile views became the default, and full-on views of the face very rare. So basically, the rule of thumb was: portray body parts in their most recognizable, least distorted form to increase the chances of having a whole, functioning body in the afterlife. Therefore, shoulders and torsos are shown full-on, feet, hands, and faces in profile, etc.

So far as Ancient Egyptian art seeming flat or emotionless: because Ancient Egyptians believed that art /was/ what it represented, negative emotions are very rarely portrayed in carvings and sculptures. Because hey, if you draw yourself miserable on your tomb wall, you'll be miserable in the afterlife! For the same reason, pharaohs were not drawn losing in battle, and depictions of the old and sick are very, very rare. Ancient Egyptian artistic tradition therefore tends to favor very serene expressions, youthful faces, and strong bodies. The Ancient Egyptians would not have thought of these images as emotionless; rather, they thought of them as expressing the "forever-young" tranquility that was the highest goal of the afterlife.

These traditions persisted for literally thousands of years, partially due to the concept of "maat." Personified as a goddess holding a feather, "maat" was the idea of truth and order, and was considered an essential part of Egyptian society and cosmology. Its opposite, chaos, was represented by the evil god Set. Since chaos was the ultimate evil, and order the ultimate good, it makes sense that Egyptian art made use of the same artistic conventions for such a long period of time. It was a way of saying that all was right with the world.

If you're interested, there was a period of Egyptian art where all of this radically changed--the Amarna Period. As part of a general cultural and religious overhaul, Amenhotep IV, later known as Akhenaten, scrapped the traditional art styles in favor of what we see as much greater naturalism and less emphasis on conventional iconography. This is the period that the famous bust of Nefertiti is from. However, immediately after Akhenaten's death, the Amarna Period was struck from the records, and Egyptian society made a very conscious return to the conventional art styles. The more naturalistic art style was viewed as a dangerous detour into chaos, and the carvings and sculptures buried with Akhenaten's son, Tutankhamun, are much more conventional.

So basically, the question shouldn't be whether or not the Ancient Egyptians were "advanced" enough to do realism the way the Greeks and Romans did. Even a cursory look at Ancient Egyptian art and material culture shows that Egyptian artists were certainly skilled enough for realism as we would define it (again, see the bust of Nefertiti). Greco-Roman-style realism just wasn't important to them. Besides, considering realism more "advanced" implies that it's somehow better than other forms or art, or that it's the highest point of art. And there are a lot of 20th- and 21st-century artists who would disagree with that.

One more fun fact! The Ancient Egyptian idea that pictures were what they represented applied to hieroglyphics too, since they were really just little pictures. Some hieroglyphs were images of dangerous animals, like "dj" (a viper) or "l" (a crouching lion). To ensure that the glyphs couldn't come to life and hurt anyone, scribes would carefully draw "dj" vipers or "l" lions with their heads cut off--just in case.