Interesting concept, @dana-edwards, and I think (to an extent) you're correct. Short of the ascetic minority and/or religious temperament, the sexual impulse does not disappear, but can be sublimated.
I wonder though - with virtual sex, as with porn - if it will not in fact sharpen the instinct (perhaps, also pervert it) so that practitioners at some point of addiction/escalation decide to take it out to the real world.
Strange to say, but this is a subject of some interest to me, and I've explored it, previously, on Steemit and elsewhere (in journals, such as Truthout as well as my book of essays: Trial by Ink: From Nietzsche to Bellydancing
Couldn't you say the same thing about books, the imagination, wet dreams?
Also why make the assumption that people would prefer to act out in the real world? Some stuff people do specifically in virtual worlds because it's too dangerous or impossible to do in the real world. For example a person worried about risk might rather experience jumping out of airplanes in a virtual world to get their thrill rather than to do it in the real world.
There are limits in the real world as well. You simply cannot break the laws of physics, you cannot do certain things for legal reasons, or for social reasons, you cannot perhaps find someone willing to do it, and so on. So while you have a point that for someone who has no conscience and who wants to harm another person then virtual sex may not work but for a person who is just interested in sex I do not see why virtual sex would not eventually be better than anything real.
And that is the whole point, it could not only become better but so much better that people prefer it over real.
No, my friend, I could not say the same about books, their satisfaction is largely cerebral... just as your discussion is too theoretical, I find, such as concluding that virtual sex could be better so that people prefer it over the real.
There is no such thing as a 'person who is just interested in sex'... We are human, my friend, and emotions are tied up to all we do.
When we forget this and try to compartmentalize our physical, emotional and spiritual selves we do violence to our nature entire...