This is a topic I have been thinking about quite a bit. My husband and I are both Second Life members. He lives apart from me due to a temporary job assignment. In the past few months we have experienced both the good and bad sides of SL.
I have visited one SL site known as Catholic Now, which contains a virtual chapel and video and audio material on apologetics, devotions, etc. This site is very orthodox, but does not offer anything resembling Mass, the sacraments or church services so that there is no potential confusion about their validity or substituting for real life Mass attendance. There is also a virtual monastery known as Felix Meritis, in which you can rent “cells” and work in the monastery gardens and vineyard.
The thing to remember about SL is that people go there to explore things they are not able to do, or do not want to do, or may be afraid to do, in real life. Some of these things are evil (cyber sex, vampirism, violence, occultism). Others are morally neutral or good (sightseeing, sailing, mountain climbing, flying planes, attending virtual college classes, going to libraries or bookstores to listen to audio versions of classic literary works).
I think the trick to effective Catholic evangelization in SL is to present it in an honest, clear but non-threatening way, appealing to those who might be interested in the Church but are too shy or embarrassed or too worried about what their family, friends, etc. might think to explore it in real life just yet. If they feel free to explore it and ask questions in SL it might pique their interest and keep them coming back.
Personally I think offering demonstration Masses, devotions (Rosary, novenas) or sacraments in SL would be perfectly legitimate and an excellent way to evangelize, so long as it was clearly explained that these were not real-life, valid sacraments, but only a way to acquaint oneself with what to expect in real life.
It would also be useful for Catholic SL sites or evangelists to offer Catholics moral guidance about how to conduct oneself in SL, or how to deal with its effect on family life. (It can become quite addictive for some people) Some users might have questions such as: is it wrong to “marry” someone other than your real-life spouse in SL, or to have a virtual baby in SL without being “married”? Can you attend religious services of other faiths in SL, including non-Christian faiths?