It's funny that you mention Ultima Online. Personally, I had the same sort of experience, but I was the 15-18 year old guild lackey. It certainly breeds an awareness of the importance of teamwork and leadership since not everyone is skilled in everything. The game is built for working together, and going it alone has some serious consequences (read: death/looting) but you get a do-over every time. Giving kids the ability to learn these things with the option to try again is far better than the permanence of reality.
I would argue that the permanence of reality is what makes a lesson stick. Without real consequences your investment is minimal, even as a child.
I think it's good idea to give your kids the chance to take real risks, with the consequences becoming progressively more meaningful (obviously you don't start with anything too harsh).
I have a pretty good sense about how I feel about pretending to be someone's friend for 6 months so I can gain access to their house and subsequently steal everything they own. Playing out that scenario was useful to me. But I wouldn't want my [hypothetical] kid to make a friend with the eventual intent of stealing their toys and never talking to them again.
There are a huge variety of moral questions. If there's a safe real-world parallel, I agree that's probably a better lesson, but games can probably be designed to help fill in a bunch of gaps.
I wouldn't want my kid doing either. I'm not so sure that the virtual scenario is any better than the real world one. You're still dealing with other people and in this example there's still a victim.
An MMO is still a social environment where you interact with other people. Those interactions can play out pretty much the same way they do in real life. The only difference is the protection of anonymity... which in my opinion is actually a negative difference. It relaxes people sense of social responsibility.
I won't be teaching my kids that it's OK to be a complete douchebag online simply because no one knows who you really are... and if I ever catch a kid of mine doing something like that, you can bet your ass there'll be some very real world consequences.
