Absolutly, but, it has to be planned out in advance, just like a painting, or sculpture. Design, balance and interest in the subject matter all have to be planned out beforehand. I am an traditional artist as well as a modeler, so I approach diorama's like I would a painting. The viewer has to be "drawn into" the scene that you depict. Some idea's work, others don't, (just like paintings)
A great example of this is in FSM's last "Great Scale Modeling 2003". I don't know what page its on, but there is a dio of The Hulk, all p!ssed off, ready to smash the scale model kit that he is attempting to construct at his work bench. Its a good idea, (because ALL people can relate, to whatever they are working on), and ALL people have "snapped" like The Hulk at one time or another, so there is the common intrest, second, it is well thought out as to the action in the scene.
The Hulk is center, his arms raised over his head, (which draw's the viewer in), his eye's are looking down, (now the viewer starts to follow where he is looking), then the gag hits, (he is about to smash the uncooperative pices of plastic before him), only then does the viewer start to look around and see all of the detail bits of the scene.
Thats Art.
I think that little dio would win at any art show that it entered in.
Steve