1. All time low? What do you base that on? Raw economic data at: http://secondlife.com/statistics/economy-data.php has shown the economy grow for the last few years; right up to today.

Second Life's economy is tens of millions of dollars a month in user-to-user transactions.

The value of Linden to USD is still in the 260s-270s  to 1 USD at open and closing rates; its stable there.

2. The layoffs were to keep Linden Lab profitable, not because it had ceased to become profitable. Under M, Linden Lab took on a lot of employees to branch off into areas such as selling Enterprise boxes, and projects such as that have speculated to have failed.

Also, not sure how "without notice" it was; considering a lot of the ones named to be cut I still see in Second Life. A few of 'em at Tuesdays "Office Hours" meeting.

3. On your list of issues:

1. Less griefers means less interest in SL? Well first; you'd have to be specific as what kind of griefing. Linden Lab rolls out a new server version every month or so; these patch "griefing". That and any griefing you experience is going to vary wildly from sim to sim due to permission sets and who has who banned. Less griefing is a good thing; it has no correlation to interest.
2. Sandboxes aren't an indicator of interest either. They open, they close, they divide population, they lose purpose when residents buy their own land or are provided by one of the new Linden Homes if they're premium residents.
3. Land sales have stagnated; about the same amount of land sold last year is sold this year. This is probably linked to the fact that just about the same amount of active residents are in SL too.
4. "Not as many active accounts" or "not more"? Second Life's resident count hasn't grown, but it hasn't really dropped. The change in bot policy and gaming traffic hit the concurrent userbase more than anything else. Besides that, sign ups are still high, retention is still a problem, but more hours are being spent in SL.

4. Quite simply, the third party viewers are open source and open to being vetted by any independent party if you don't trust Linden Lab to do the job before approving new download links.

5. It seems you have Second Life confused for a "game" to compare it with All Points Bulletin. It isn't an MMO, its most comparable to the text web if HTML was swapped out for 3D content. Each sim can vary as much in purposed functionality and type of commerce as much as a webpage can.

So, APB is not going to be a competitor to SL.

6. Blue Mars will be a competitor for Second Life, in that its a virtual world that seeks to enable user to user commerce through business and entertainment. How well it'll perform against SL we won't know 'til its released.

7. "Copying" is always going to be an issue. It's just a fact of life. So long as 3D content is rendered via our hardware, it can be intercepted and stolen. All Linden Lab can do is make it harder.

The best thing that Linden Lab can do is handle the DMCA claims process better. It's getting a lot of bad press for this. One big incident lately was Rustica, a well-known prefab designer, being given the run around: http://rusticahomefurnishings.blogspot.com/2010/06/followup-ll-drops-ball-again.html

So IP enforcement is an area Linden Lab definitely has to improve on.

8. In response to your "What Linden Lab must do"

1. People are free to do whatever they want in their private regions quite simply. If they want to use a viewer that allows automatic banning from that region, they can. It's not like you're banned from SL all together, and if you disagree with the reasons you were banned; petition to the sim owner.
2. The "data mining" didn't happen from the Emerald Viewer, it was done via SL's inherent land functionality. You can read about it here: http://blog.modularsystems.sl/2010/05/11/regarding-the-concerns-over-the-database-compromise/   The purpose was to create an anti-griefing measure that didn't make it out of beta. So its nothing that's still around.
3. You've had about 3 different opinions of copying and IP protection in this post. but again: there'll always be some form of copying. Linden Lab should always target tools, but more importantly should handle DMCA claims quickly, ruthlessly.

All and all...this seems inspired by you being blacklisted by some database of of known griefers/copybotters. You'll have to take that up with the sim owners who've banned you from their private regions. Linden Lab can't circumvent their rights with their own land.

Hindsight is a funny thing, It lets you take all the information that the OP wrote and point out how far off  he really was.

APB died and got relaunched as F2P with not a smidging of competition towards SL

Blue Mars has ceased PC development to focus on the iPhone

SL economy is pretty much unchanged over the last few years

Log in's are unchanged

New account creation is pretty much stable

Meshes are coming soon which will  provide a much needed graphical update to match any current graphics.

Emerald was banned

Its goes on and on.

The SL economy seems to be fine. Its not as good as it was in 2007/2008. It seems like 90% of the new content creators use resell/full perm kits and the other 10% makes original stuff, I'm not even counting the people that make crappy stuff and never get anywhere. LL seems to be trying to get more people that would use content rather than create it. Which can be good to a point. But when you start making stupid features for them and facebook users and stop caring about the creators thats really bad.

But yeah, SL isnt as bad as the OP says. Griefing is down a lot I've noticed because its gotten old and there aren't any new ways to grief people really.