It wasn't creepy back then. It was actually a really exciting place, at least as I recall.
It was amazing to have this ability to customize your avatar and float around talking to other people with your own voice in this 3d space. In 1996 anything 3D still felt like extraordinary technology on that basis alone, and the customization... I don't think there was anything else like that at the time.
What was really interesting in retrospect were the social dynamics. Your voice got quieter over distance, so when you approached two people talking, it was just like doing so in real life. It was a totally different experience from every kind of social space developed until then, where you're in this kind of spacial singularity. Everyone is in the same space and everything said is equally visible to everyone, even in the couple other voice chat programs that were around at the time. There are very few games even today where voice chat is handled spatially. It's sort of this weird universal soapbox that everyone's standing on at the same time. That program felt more like being at a real social event, where you wander around and talk to different people in turn.
Now it's seen a ton of use and towards the end of its lifespan, people probably only saw it as an amusing space for making things that would freak out whoever stumbles on them. Some of it may have even been used for roleplay. That's actually how I was introduced to it. Someone mentioned it to me as a thing that he was considering using for immersive roleplay. Now all that stuff has been left behind absent of context, and it evokes the same sort of reaction as wandering into an abandoned building.