First: SAO is an full VR RPG
Second: Sensory input is not perfect. Sure you controll your ingame body as your RL body, since the signalinput and output is directly taken from/delivered to your brain while it's blocked to the rest of your body, but that doesn't mean it's perfect. It wasn't mentioned in the anime, since they decided to not show that specific sidestory, but in the LN it's mentioned that the VR can't give you the perfect feeling of a bath, it just feels wrong. Same for other sensory input. What was mentioned was that pain is blocked, but how do you want to distinguish perfectly between pain and pleasure nerve signals?
Third: The game uses calibration data from your real body. So whoever sees you in the game naked has - so to say - seen you naked in RL. I bet many people wouldn't have a problem with others seeing their avatar naked, but their real body?
Fourth: Running around naked... sure some pubertal adolescents would do that, but it loses it's uniqueness etc after a couple times. What's not forbidden is not interesting for adolescents. And don't forget that you don't have armor on yourself if you are naked 
Have fun with the next mob. See you in town.
So, finally: With the above, why don't just meet in RL and have sex - with full sensory input - there? Sure, you can't get pregnant in a VR, but hey, ever heard of condoms?
I'm sorry, your argument is just too adorable to pass up. You can have my dawwww~ if you want it.
To your first and second point, that it's incapable of providing sexual release. Yeah,
people won't care. They really won't. Sex is predominately a mental activity to begin with. Even if the sensations are imaginary, even if they're just going to log off and furiously masturbate in the echo of having lived their sexual fantasy, they'll do it. Underestimating people's sexual fetishes is something no gaming company would do, not if they don't want to be sued. Again SAO creators are of the Lawful Evil variety, but every other aspect of the game -- besides the whole being mentally jailed in a horrifyingly deadly experiment thing -- is consistent with what I'd expect from an all-ages MMO.
To your third point, the data is calibrated for motion purposes, they began playing as avatars before this whole debacle began. I assume the Creator trolling them all by re-configuring their avatars to their actual human selves was a simple hand-wave to prevent us speculating on whether Asuna is actually a balding middle aged man with a paunch. Who, exactly, would want to play a VR MMORPG if they had to play as themselves? Without the atrocious circumstances of having no other option available to them? Think what the average gamer looks like, and then imagine thousands of them all in cosplay outfits doing the mimicry of physical exertion. I... do...not...want.
To your fourth point, having naked children running around your game world doesn't seem like a problem to you?
Especially if they were in their IRL bodies? How exactly are you measuring the maturity of the average online gamer anyways? Do you not think, assuming they could design their own avatars as with the beta and the beginning of the show, that there wouldn't be a swarm of improbably-figured female avatars jumping up and down singing nursery rhymes in the nude everywhere you looked? Just as an example, of course.
Finally, as to your last point, yeah -- cybersex doesn't happen... at all... ever.
