I am perplexed.

Yes, a company running a virtual world can do whatever it pleases with it, including deleting users. This does not seem to deter substantial numbers of people from having online identities tied to Second Life or World of Warcraft or Facebook. Users won't stick around if the world is managed too badly, companies know it, so there are limits to what companies will actually do.

But even accepting that a wall garden run by a single company is undesirable, there is no particular reason to drag the blockchain into it. Just use a federated system, like OpenSim's Hypergrid [1] or High Fidelity [2]. Then you can run your own server and host your own assets, and hook it up to others in a grid or just jump around as a visitor. This has all been around for years and has nothing to do with the blockchain.

[1] http://opensimulator.org/wiki/Hypergrid

[2] https://highfidelity.io/