Yes. And no.
Yes you can preview drafts of existing pubished items. We're very proud to have this feature as part of Real Preview for Joomla. It really make a difference to clients and administrators to be sure that what they see in preview is exactly how it will appear on the front end once published.
You do need at least one instance of a published item preferrably with its category or individual article pubished in a menu for Real Preview to work properly. This is becuase the data model in Joomla is predicated on the requested item being published - without hacking the core we can't change this aspect of Joomla. We are considering a reversible core hack to allow this.