interesting point of view, HC.
but let me disagree...it's not the comparison of human life to computer simulations or the rendering = existance that's bothering me.
for me, second life is only virtual, and may be finite, according to hardware limitations, but reality can also be finite by our brain limitations. i don't belive it to be infinite, but i'll belive what you say and take it for granted. in my humble opinion, computers are just tools, a refinated version of a hammer, and not meant to be more important than the work itself.
my point is: here, in the "first life", everything is connected, everything is alive. you don't need to see to know it is there. you feel it through your fingers, through your ears, through your soul. perhaps one day, the "second life" will be as real as david cronenberg's "eXistenZ", where you can die, touch things and even have an orgasm...like "the matrix". i think that binary language misses all the depth of old style analog reality, like CD's miss the warmth and depth of a vinyl read by a nice sound system.
in my opinion, you are making something that was created in the image of reality, another reality, bigger and better of the original that served as it's model.
i am not saying that there is only this single reality. we both know that it is a lie caused by our egos and our auto-filtering brains, choosing (or rendering, like you said) the bits that we are turned to, interested and willing to observe. truth is only "avaliable" in very specific moments in our life.
the problem is: we are products of this universe, born FROM it (and not IN it), so i doubt that a reality we can create will be as infinite as this one. for example, how can you program things that you don't know ? here, i can discover the cure for cancer, or find aliens in saturn with my telescope, and be the first to discover it. in virtual realities, you already know everything that is available to happen as a programmer, no ?
edit: i understand what you said (and forgot to write) about the shapeless form of cyberspace. but, following that line of thought, books are also infinite. music, everything that is abstract thought is as infinite as one wants it to be. with no outside, shapeless amounts of thoughts. even prehistoric monkey's plans to kill a mammoth were infinite. this can only be natural, as we are born from the universe, and as it is infinite, so is our thoughts and "second life", and von Bingen's fire tongues. we are no different from jupiter or andromeda. all elements are born in the same mechanisms. and even this discussion was once inside the primitive solar nebula, and was carried to here by you and me and everyone that joined the thread.