Virtual Worlds and Fair Use

I've been checking out Second Life a bit recently. I think virtual worlds are interesting, but I have yet to really get involved in any substantial way. But, the complexities that swirl around copyrights and virtual worlds got my head spinning a little bit.

First of all, I'm no lawyer (INL) and I don't claim to fully grasp all the issues, but this is the scenario that gets me thinking...

• I can have a party at my house, invite hundreds of people, and play my music to them all - or have any of them pick any song to play at any time... fair use, right?
• I can NOT take that same music and put it on my website and invite those same hundreds people to pick from the same songs and stream them on demand... the RIAA and copyright holders would have a fit

Now, what happens if I have a virtual house in Second Life? What happens if it's a mansion? With it's own ampitheater? Can I invite thousands of people to come and listen to my music? Can I leave my music collection exposed on my virtual PC, connected to my virtual stereo in my virtual living room? And leave my virtual front door unlocked? And put a big billboard in my front yard that says, "come on in and listen to my music". Is if fair use? What if someone at my party wanted us all to listen to their music (something I didn't have)... could we all teleport to their virtual house and listen to their virtual stereo? What if I created a playlist out of all of the MP3s that existed in the virutal world, and when I listened my virtual self just teleported from house to house to house? Obviously there is a line where things are more obvious infringements... but where is that line?

My head hurts... yours?