The L1 visa is an intracompany visa, allowing you to live and work in the US, for transfers with an existing employer.
Yes, you can live and work on it. I know a large number of people who have these visa's. The first individual I got one for was in 1991.
I suggest you read the INS site for full details and information;
http://www.ins.usdoj.gov/graphics/index.htm