Linda:
This worries me too. I retired from teaching some years ago now, but did see, in formal essays, things like: 'Hamlet's 2B or not 2B' speech is v/famous.'
I understand and accept that language is a living, changing thing and I should expect it to develop. However, I want changes to add to and enrich the language, not diminish it. I am reminded of Newspeak, which has no nuances or connotations.
Like Goodgulf, I really, really don't think 1337 is going to become accepted formal language. At most, it will become a mainstream dialect for casual conversation and minor business transactions. Slang dialects come and go, and some dumb kid will always get an F for trying to use one in an essay.
I also wouldn't compare it to Newspeak. 1337 actually has some nuance to it, with words having non-literal meanings and connotations. It also doesn't shrink the language like Newspeak did; if anything, it expands it.