There have been some hefty discussions going on recently at WoW Insider concerning buying gold and accounts, and the subject of gold farming's fast becoming a favourite amongst MMO commentators. However, the phenomenon of real money trading (RMT) is not a new one, and Terra Nova have been digging into its history.
An interesting comment is that powerlevelling another character wasn't originally a service done for cash: "Men did it for women in the hope or expectation of some kind of emotional or physical relationship." Nice work if you can get it. According to Richard Bartle and Jessica Mulligan, selling items for money dates back to about 1987, and character sales have been happening since at least 1989. However, both were on a much smaller scale than the items available to purchase through eBay today; the universally-known auction site has certainly helped RMT take off and attain a much higher profile than it had in its early days.