Is it conceivable that something like Second Life can be created in Unity?
Sky is the limit and everything is possible since you have `for loops` and `if statements`.
There is actually a MMORPG game called Cartoon Network Universe: FusionFall that uses Unity3D engine and another notable game that you can check out is the Off-Road Velociraptor Safari HD. Don't forget though that you are going to use Unity only for your client side only. The server side and the backend it's another story in these kind of games.
So I think the answer to your question is yes, it is possible. But do you have the manpower to achieve that? If you do? Good luck and have fun!
It's not worth trying to recreated Second Life inside Unity. You'd be better off creating a Second Life client using Unity as the rendering engine.
There are already Unity-based Second Life clients in existence.