One such dimension that is growing stronger is the use of SL to create pieces that would be impossible IRL. 3D, scripting, movement, dynamic texture changes and transparency are all examples of techniques that is used to create this new kind of art.
But another dimension is art that expresses the SL society; situations, personal behaviour, limitations and possibilities that are unique to avatars, and how these facets of virtual worlds touches the human soul, mind and body.
When you combine these two dimensions, you got art that can not be created nor understood outside of a virtual world. That is what I would call true SL art. It's still rather rare, because not only do the artist need to master the techniques; she would also need to have a life experience in SL; he would need to really immerse her selves in the environment; she would need to have his heart broken by losing people.
Gender confusion is deliberate :-)
Luckily, several of the talented people that joined SL in the boom some three years ago have understood what SL does to a lot of people, both good and bad. Cat Boccaccio is one of them. She is still the only artist that I know of that can make truly erotic avatar art, and now she has taken that understanding of SL into the NPIRL sphere. Her work "Identity Crisis" should be experienced by anyone into art in SL, because amongst all the other great works at the UWA exhibit, hers is the only (or the only one I saw I should rather say, its a large exhibit and I may have missed a few...) that takes 3D art to a personal level.