Two new photo printers - Epson's $799 Stylus Photo 870 and Sony's $680 (ex tax) UP-DP10 - come as close as any that I've seen to achieving this goal. I tested shipping units equipped with pre-production drivers.
In a nutshell: If you're comfortable investing around $700 in a printer that handles only photos, the Sony deserves consideration. It's especially worthwhile if you're satisfied with your conventional printer for documents but want better photos for little loss of desk space. But the Epson's fine print quality, greater versatility, and price give it broader appeal.
Epson Stylus Photo 870