But there’s a very clear distinction in the law. Libraries are covered under first sale doctrine. You can do effectively what you want with a physical object that contains copyrighted material placed there by the owner.
Digital anything is not covered by the first sale doctrine. Every individual loan is a copy. Every time a “copy” moves between devices is a copy. There is no legal framework for ownership of anything digital. It’s always a license, no matter what permissions that license grants you.
You have to pass new laws to match the digital world. Under the current laws, it’s extremely clear that lending unauthorized digital copies of a physical book is copyright infringement. Wholesale copies of a work aren’t even in the neighborhood of fair use, especially when you’re distributing a bunch of them. DRMing those copies is completely irrelevant legally.