There ARE significant efforts out there to offer mostly compatible, but separate, grids based on similar reverse-engineered technology.

The main concerns with most people currently include the following:

1) sheer inertia: for all its flukes and inferiorities, Second Life provides one thing: connected communities and significant numbers of people in the world at virtually all times. There is an axiom that the power of a network is exponentially proportional to the connections and interactions that form within it. On that count SL can hold its own against some other Web 2.0 systems.

2) an actual microcurrency system. there are fractions of dollars that Paypal outright refuses to handle. L$ steps into the gap (rather awkwardly, but still usably) and allows people to charge for virtual goods and services. And the ability to charge fractions of a cent is not necessarily an impediment to creating an economy - money flows in SL are cited at about several hundred thousand US$ a day. Granted, part of that value stems from agreement by all quarters of SL that the L$ is a storage of value.

@Reader:
Second Life must require a special type of MMO player...

It does, in a sense. I had some months in EVE Online when I was more bloodthirsty and young, and I tend to find that when death is not an option and your mass driver is more a roleplay trinket than an actual instrument of force, but rather cordial (or otherwise) relations with others and the application of a flourishing intelligence, a different breed of people tends to spring out.

I would kinda finger out players of A Tale In The Desert as fitting this role more - there's no combat unless one wills it in Second Life, only crafting, conversation and politics.

There's also some booty shaking, but that's only if you actively go finding that sort of thing xD

Second Life if free to all. If you would like to purchase land or L$, that's when you start to cough up USD.