Saw this on Kotaku just now, Youtube user andrewmfilms has created a short video using sprites and sound effects from Metal Slug within a real life setting.
A couple of things which are a shame he didn't include were the 'Heavy Machine Gun' sound effect and the actual Metal Slug itself!!
If you check out his Youtube channel you can see some more similar videos, including 'Real Life Mario'
[Edit]: Also seen on Kotaku, is this Metal Slug made out of Technics parts!!
Created by Youtube user Mahj, you can check out more images of the 'Metal Grudge' on his Flickr account here.