For sure, the graphics are still not high quality, and the manipulation of objects is still clumsy, but the people using Second Life are becoming increasingly sophisticated on what they're able to do. Give credit to the Linden folks for creating an environment with substantial flexibility.
In the early days of SL, people were constructing buildings and environments as a way to re-create the real world. Witness schools like Princeton, MIT, and Vassar and their recreations of campus buildings, complete with the traditional chairs and lecture halls (if everyone hates lecture halls so much, why are so many of them being recreated in SL?).
Then, the galleries started taking off....first galleries that displayed "traditional" art. Vassar recreated the Sistine Chapel, which takes advantage of the ability to fly around the room in order to get a closeup view of Michaelangelo's work. Now, you are seeing installations that create "objects" that would never be possible in the real world. (http://slurl.com/secondlife/Princeton%20North/189/117/30)
This week, I found some amazing things being done in the sciences. It's now possible to walk through hurricanes, view a recreation of a solar eclipse, view (and interact with) real time 3-d weather maps, and manipulate scientific equipment. The Science School (http://slurl.com/secondlife/Science%20School/176/148/28) is just one example of the work that's being done.
With all that being said, one of the best questions I got during the presentation had to do with all of the hype SL is receiving, with many stating that this is the magic bullet for solving all pedagogical problems. We have to remember that there is a long history of these magic bullets. Just like the introduction of the television, the VCR, the laser disc, the personal computer, and the world wide web, Second Life is one of many technologies that are available for teaching. One must decide if investing the significant time this type of tool will take will help accomplish or enhance teaching and/or learning goals.