I wonder if the reason we do not have high resolution in the virtual environment is accessibility, in so much as we are all using that which was rendered to accommodate users with low spec pc’s, anyway in theory resolutions will improve dramatically with cloud computing.
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howya2life 
You have identified what seems to be a serious problem for SL I believe. The main positive feature of this virtual world is that the ‘residents’ can shape it into their own: you can build stuff, buy and sell, meet people, play and listen to music, play games, role play etc. But, the low resolution graphics mean that people used to playing hi-res games will find it difficult to suspend their disbelief in SL – it is not sufficiently convincing to be truly virtual. I don’t have the technical knowledge to understand the reason for the lo-res, perhaps the platform is dated, or the download speed is restricting but, if Linden Labs cannot improve the quality I don’t expect SL will be sustainable in the long term.