IRC mostly deals with the reverse DNS names rather than the actual IP, which makes it much easier for an op to ban a specific ISP, a specific town/state/country for a specific ISP depending, etc.
This would ban other innocent people unintentionally. For example, I live in an urban center with 4.4 million people and use one of the biggest national ISP's (we have like 3 main choices in my country) - this could ban up to 1 million innocent people. Unless I am missing something here, this method seems to give a great advantage to the malicious user, who could take other people down with them - even if the generic IP ban is more surgical but still not at the individual level. I have also tracked my own IP and sometimes seen it reporting my own geography incorrectly.
I certainly witnessed many times web forum users who are being IP banned still online at the time of their ban and their IPs are known to the web admins and forum moderators. It is hard to imagine someone choosing to install a forum (or IRC for that matter) for themselves that does not include this capability. I certainly could see a hosted IRC service masking IPs from its subscribers (mostly to protect themselves) as you describe but imagine that the hosting service has access to the individual IPs.
Most modern IRC networks will also mangle the first part of the addie and provide consistency for IP addies that won't resolve for a name (with reverse DNS you ban left to right, with IP addies you ban right to left) so that an op still has all the benefits of mask banning (or regular people for muting) but noone's actual IP is publically availale.
Question, for these IRCs, would a malicious user have access to the IP of the IRC host for an attack where the operator does not have the IP of an attacker? That seems hardly fair for all of the other users, especially if all the moderator can do is drop an IP ban on an entire city/ISP. This method seems to favor the attacker although I admit I am not an IRC user very much and so might well misunderstand.
If IPs were ever exposed on SL though, you can count on the fact that within two weeks someone will be providing or selling a list of alts. It also makes RL location in terms of country and possibly city public information.
Yes, exactly as it does on websites today which brings us back to the original question: what are the reasons this is common practice on the rest of the internet but not SL? (For example, many ads are served up using this information).
An alt is alt and not exclusive to SL and when someone bans an avatar or internet account they are trying to ban the person behind the avatar/account, not the the avatar/account itself so such a list would be very helpful.