Is it possible to create a system like "Second Life" 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!

there are many features that they are not built in but you can create one. as server you can use your own home made tools or use kinds of system like exitgames's photon or netdog. in terms of client sie you have all the things that you need. for creating the scripting you can use the mono's C# compiler class or DLR. to use DLR and ironpython you need a newer version of mono so you should wait for some months and when unity upgrades it's mono you are good to go with pyton or ruby or any other scripting language you want with DLR. even now you can integerate lua or python with you standalone games but it's hard to integerate them with web players. for playing and laoding different media files like video file formats you can do one of several things. you can upload them to server and convert them or use a DLL to play them if the game is not inside web player. also you can use browser's javascript to play music and video. in IE easily you can access media players but it might be harder to do in other platforms and browsers. there is another disadvantage in unity about supporting eastern languages. at this time getting input and showing text is not possible for all languages. they are working on it and with IME so don't worry.

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.