I don't think LL ever intended for SL to become a porn virtual environment. Its quite possible that they're in the process of trying to change the "negative" image of SL in hopes that private businesses/corporations would want to join (come back) to this amazing virtual world. Even with all its faults, SL is still the BEST virtual environment today.
Also, it takes a lot of money to run a virtual environment this size. A LOT OF MONEY. So yes their #1 focus should be how to generate more income for the company while still allowing players to enjoy their creativity.
I first heard about SL when LL was trying to pitch the concept of working in world to the company I was working for at that time. Of course they decided not to do it because of the uncontrolled "Adult" content.
There comes a point when someone at the top has to make a decision and they've made theirs so that they can stay in business.
For every 1,000 players that decides to leave the game because they can't get their "freak" on the they want to , there will be another 1,000 players to take their place.
Its obvious that if they don't do something now, there will be no SL later.