My son recently turned 7, and is quite the proto-gamer. He's got his own steam account, and he is a Minecraft/Terraria addict.
About a year or so ago, he started his youtube fix: he wanted to watch 'how-to'/review videos for transformers, star wars, and lego toys. This posed a major dilemma for me: he really enjoys watching the videos, but lets face it, there is a lot of 'inappropriate' language. One day, after telling him to skip a video for the nth time, I simply decided to stop the censorship. I sat him down, and taught him all the dirty words. We talked about reasonable limits. I.e. things he's allowed to search for, and when he needs to stop following the 'related path'. I told him point blank that I have high expectations for him, but I trust him. I can't protect him from the world, but I can shape his interpretation of it. He knows that if he imitates some of the bad language/behaviour, he's going to get an internet 'grounding'.
I take the same approach for his gaming fix: he's allowed to play a wide assortment of games, but only on his own, or with ppl he knows IRL. He has an email address, and a skype account, but he knows that they are 'family' only.
His computer (my old gaming rig) is right beside where I work, and we talk about what he is seeing/hearing. I probably won't know for a few years how things turn out from a moral perspective, but I do know that his reading/writing/logic skills are substantially more advanced than his peers. At 7 (grade 1), he is reading the minecraft wiki, and his google-fu is starting to develop. I'm looking forward to seeing what happens when he takes his iPad with him when he visits his Grandma's house this summer.