It's happening in over here too. You are right that a lot these people won't participate in real life fights, they just stare down and the first one to walk away gets more smack talk sent his way. It's sad. And this is legal behavior is the worst bit of it. Make it legal to bitch-slap these punks and I would need gloves to keep my hands from bleeding I'd be doing it so much.
Very true, that may be the cause is the old fashion of leading by example has gone to the wayside and is only told in stories anymore. Being held accountable for your actions is only something people volunteer to do anymore if you read the news, and since it's not necessary many just ignore the need to be responsible. Wonder how long until society crashes and we go into Darwinism where the fit survive and the detritus dies off...........

I totally agree with you, tb87670. I feel old saying it, bit what has happened to today's youth? I think it is that the educational system, at least here in the US, has taken all accountability and responsibility out of schools. This translates to everything else, including video games and real life.
Exacerbating this is that this is the first generation to grow up entirely in the era of the internet. Folks over 25 can probably remember a time when there wasn't this total anonymous inter-connectivity, so they learned to relate to people in a more polite way. Now, however, anonymity is almost taken for granted, and as you have mentioned people can be down-right anti-social in public.
Now, where I live, people tend to be much nicer. I could probably strike up a conversation with half the people on the sidewalk, and probably only the rare individual would say anything vulgar. But, I live in Western North Carolina, and we are still somewhat like the South of old, with all that entails (good and bad). Even, here, though, with all the carpetbaggers moving in, Southern Hospitality has become a little tarnished.
As has been stated a few different ways in this thread, anonymity breeds contempt.

I don't think this is a "New" phenomenon. There are plenty of older folks who are just as bad. There are just fewer of them because most of us mature past this stage over time.
Kids are kids and are still learning their place in society, thus testing the established "rules". I'm pretty sure we all had poorer attitudes when we were kids - Fighting w/parents, treating other kids poorly, fights, etc.
I just take stock in the fact that kids who act like that are in for a rude awakening if they don't "grow-up". The Internet may provide them "protection", but try and act like that when you are interviewing for a job w/me and see how far that goes.

I lol'd

I am...at work at least.

I haven't really encountered any rudeness in my online gaming, but that may be because it's limited to TF2 and the SC2 beta... Then again - while watching SC2 replays get casted, on several occasions I've heard the American hosts amazed and even a bit confused by the politeness of the Europeans, so - IDK.
I would venture a guess that gaming is simply more widespread in the States, and this obviously means that you can meet different kinds of people online. You simply remember the jerks a lot better.

So...you're getting lipped off in a game because Liberals are running the country...what?
And when exactly has this Liberal governance happened? In case you hadn't noticed, aside from two terms of Clinton and a half term of Obama, it's been all Republicans in the White House since 1980.

Wait a minute... Doesn't that include the sexual revolution and all the social progress we owe to the hippie movement ?

Yeah, but... that's a good thing. The sooner we get over this primitive "omg, you said something nasty about my mother, I have to beat you now!"-mentality, the better.
To take it to the extremes, look at the mess around the Muhammad caricatures. Here we've got a whole bunch of people prepared to kill, even go to war, because someone in another country ridiculed a dead guy. It's essentially the same thing, just on a different scale.
If you're deeply offended when someone who don't know you or your mother says something nasty about her, you just need to get over yourself. Simple as that. Otherwise you're the one with a problem, not them.

Of course. Words are just that. Words. They can't break your bones. Putting the butcher's knife down is what distinguishes a civilized person from a savage. And yet, the irony is that courtesy - which I think ought to be a by-product of a civilized culture as well - is a slowly dying trait in our society.

Yes, perhaps - though I'd rather have to deal with people being rude to me than people killing me because I gave them a disapproving look or made a joke about their mother. :-)
Edit: My point is that your Conan-quote is absolutely right, but that I believe it's an inevitable trade off I'm more than willing to accept, because the alternative (primitive, pride-related violence) is worse.
Edit 2: That said, we should of course try to lessen the problem, as we don't want a society where being a jerk is the accepted norm either. I'm just saying that punching people is not the fix we're after.
Sheesh. :-)

However sometimes a word can hurt you more than a knife would.
But the online "I r a gangsta" shit - I couldn't care less about it
While playing WoW and using the Looking for Dungeon tool (which acts like a matchmaking within your battlegroup), I've met many people, but most of them were polite and even very friendly, despite the countless examples of horrors of other people written on WoW forums. Of course, I've met an idiot/jerk from time to time, but that is a quite rare sight. I guess I am probably lucky.

Which is why I prefer shops that provide headphones. Furthermore, I think you will find a higher number of punk in Lanshops.
This thread smells of nostalgia of the good old days. These kids will eventually grow up and understand that hurling vulgarities and smacktalk isn't the acceptable way to behave.

Dude, you're crazy.