I haven't seen too much in the popular press about this yet, but back in March there was a gamma-ray burster (GRB080319B is the name of it) that actually reached naked-eye brightness for a few seconds. National Geographic has a couple of images
here, and there's a "movie" of the images at
the Pi of the Sky site, the robotic telescope that got the peak brightness measurement.
The burster is about
seven billion light-years distant. Yes, "billion" with a B.
Gamma-ray bursters are believed to be a kind of supernova explosion where most of the energy output ends up in two beams coming out of the poles of the system. They are rare, and and also you generally only see the ones pointed at you.
The preprint about the object closes with a speculation that if the thing had been in our Galaxy, one kiloparsec away, at its peak it would have appeared several times brighter than the Sun. I've been pushing numbers around, and I also think no one would see it; optical light peak follows the gamma-ray peak by about 100 seconds, and the power in that hard radiation peak would ionize the atmosphere and kill everything on that half of the planet before the visible light reached detectable levels. As the authors comment, though, such a thing is an exceedingly unlikely event, and very probably it has never happened.