why do you think LOL is an unacceptable deviation of lol? have you read half of the posts by huhu and rainkhan? i would disagree with your assessment there. depending on context one can be preferable over the other, but saying either one is taboo in general would be a misnomer iMo.
as far as the other variations in capitalization, lOl, loL, and Lol don't make any sense and would be like randomly capitalizing letters in any acronym so we should exclude those (along with lOL/LOl).
what we're left with is LoL, which would ostensibly be logical usage. however, the anonymity of the internet leads to a social dynamic where people feel more comfortable operating on the presumption that they are hip and cool because, at least initially, there's no way to prove they aren't. alternating the capitalization in LoL is more cumbersome than simply typing lol, and reflects the level of coolness or lack thereof in an individual.
lol represents the smooth and easy life of someone driving a lambo and living in a penthouse and banging 10's all the time. he does what he wants, and feels no need to emphasize particular words in an acronym through the use of capitalization. LoL, on the other hand, is more indicative of someone driving a station wagon who lives in a small apartment and maybe bangs a 6 once in a while. in order to adapt to his life, his brain subconsciously starts to view a certain amount of striving and even suffering as necessary parts of life, and this shows up in his willingness - and even preference - to go through the work of typing LoL. i believe this is how the standard is set, and a majority people simply copy it out of convenience.
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