Hi,
I'm not up to speed on SL costs but I can guess it comes down to triangle count. In Curvy you can reduce the triangle count of most objects using the resolution slider in the object properties channel, and for more complex objects you can use mesh simplification to reduce triangles (You'll have to use simplification if you've used sculpt tools on the model).
As to the golf-ball effect, I've not see that before in blender imports. It looks like each triangle has been split from its neighbours. I know in other software you would "weld" or "merge" the vertices to join them back together. (Curvy exports a smooth skin, so I can only guess an OBJ import setting in Blender is separating the triangles again).
You should be able to make a detailed marshmallow in under 500 tris, and a low-res one in under 100.
I'll have to experiment more with SL uploading before I can offer an updated tutorial.
Probably that's sculpted objects and Blender just shows it unsmoothed. You can smooth it inside Blender, it only changes normals, not geometry.
If you make a Lathe and export it without any sculpting, it's pure quad object, very low poly. I guess Second Life likes more low poly objects? You can easily make marshmallow shape that way.
I don't know about SL, but there are a lot of tutorials around about optimising content for SL.