My first encounter with an avatar was in a technology class where I had to create one in SecondLife. I have heard talk of using avatars in training for the military but have not seen any. I googled avatars in education and found a blog that addressed 10 ways to use avatars in education.
The one I was most interested in was bringing historical figures to life. Teachers are designing avatars to look like historical figures such as Mark Twain or Albert Einstein to bring their lessons to life. Students are more actively engaged with the material with an avatar presenting the information. It is a hook to keep the students involved in their learning. Great idea with a lot of payback for students.