To anwser your first question yeah, I've met plenty of people that confess to having "Alts". I even had a boss in SL who would sneak her alt in just to see that we where doing our job. I don't think there is anything negative to having multiple accounts. It's like an extra layer of trust that you can tell people when you feel close enough to.
As for do I see them seperatly, yes sort of. I made an account to help out a friend that was doing Bloodline and that avi has a story and stuff. My DJ avi has connections so I can DJ and have a regular flow of Lindens. Then I have MY Avi, which s for me to have fun with. 3 avis all diffrent and no frownie face.