I believe the answer to virtual worlds in elementary school may be within the Edusim environment.  A protected world where educators along with their students can experiment and create learning environments. 

We experimented tonight with the opensource 3D virtual software that has been created to use with interactive whiteboards.  I believe it can also be used within a lab situation to give each student the ability to interact within a virtual world from their on computer. 

http://edusim3d.com/

You need to view the video so you will have some background information before you listen to the podcast.  Even then, because we played with this virtual world using Yugma, it may be difficult to follow.

I still don’t understand how to have more than one avatar in a world.  When you figure that part out – please let me know.