Following GDC, I'd heard of this Flash-based virtual world being developed by Three RIngs, the makers of the popular Puzzle Pirates game. However, their own website has little information on the product, so I'm linking to Alice over at Wonderland instead.

Three Rings is calling this thing Whirled (get it?), and it's what the kids nowadays are calling 2.5D. They plan on making the source for their in-world minigames available to encourage hackery, which is brave enough. Even better, they want people to upload their Flash-based content as well. Quick note: have you seen Newgrounds? This could either be really great or really horrible ... actually, I take that back: it'll likely be both at the same time. And it hits SL right where it's weak: no Flash. Considering the number of people out there who already create Flash-based content on their own, this could be big. More as it develops!