In my opinion Second Life should be treated almost exclusively as fantasy. People have different fantasies of flying, being a supermodel, or being a professional athlete, and it is possible that these people get a certain amount of satisfaction by creating an avatar that can become these things. If I remember correctly, the PBS documentary also had a story of a video game convention where several people met up who had previously played with each other online. Some of the players described a joy they experienced from being something different then their real self. If people experience a certain happiness from Second Life I have nothing against it, but I have no need for it.
In my ethics class, someone brought up that a couple was so obsessed with their Second Life avatars that their real-life baby starved to death. When Second Life becomes so involved in real life, it is no longer a fantasy. In addition, I see the benefits for business meetings, but sexual acts seem rather strange. As strange as it is, if it's a single (not married) person's fantasy then I have no problem with it. However, when it involves married people, or people with different identities, ethics becomes an issue. I think we should treat Second Life as fantasy only unless it is used for practical business practices.