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While basically everybody is going to agree that trading child porn is not cool, the fact that it happened in Second Life is, I think, just another example of the media jumping on the "Second Life is new and interesting" bandwagon (when in fact Second Life is a MUSH with graphics...not new). I'm sure far more child porn gets traded via email, MySpace, and other social networks than in SL.
The interesting thing here are that laws differ quite dramatically from country to country regarding what is child porn. For instance, as I understand it, simulated child porn may be illegal in Germany, for instance, while it is protected in the US (see Ashcroft v. Free Speech Coalition.....
So if you're Linden, do you then ban ageplay? (Adults having virtual sex with other adults who are using an avatar that looks like a child.) It's a protected activity in the US where you're located, but the majority of your customers are not in the US.
If you start banning things because they're illegal in countries other than the one you are based in, where does one stop? Do you ban any slight on the King of Thailand, since insulting the royal family is strictly illegal in Thailand? Do you create a sort of electronic Iron Curtain in your game and partition content and users in ways that imposes ruleset X for user-created content that will be viewed by people in country Y but ruleset A for user-created content viewed by people in country B?
Interesting times, interesting times.
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