Thanks for your response! Yeah I've read the terms and conditions and had a go on second life the other day.
In the reading I have been doing there is such mixed opinions on the policing of second life - it seems to be a very complex topic.
Some acamdemics think that many of the crimes that can happen on second life - copy righting, violence, money laundering etc need to be stopped by Linden Labs by altering the codes of the game space - so people are unable to commit these activities, however feedback I have got from a lot of residents is that they don't want second life to be policed - it is a game, and as people can make things on Second Life and have the rights to what they make they are in fact co-creaters of Second Life - which suggests self-policing - leaving people to themselves is the best option for second life - as you say there is an abuse report in place already.
However, as real money is put into second life, copy righting becomes a more serious issue - one which could involve real life jurisdiction. The whole governing question becomes more serious!
Thank you for your feedback!