The NEL was an offshoot of an ongoing digital lending project called the Open Library, in which the Internet Archive scans physical copies of library books and lets people check out the digital copies as though they’re regular reading material instead of ebooks. The Open Library lent the books to one person at a time—but the NEL removed this ratio rule, instead letting large numbers of people borrow each scanned book at once.
It sounds like what you’re describing is what they were doing before they did the thing for which they got sued.
As for AI, I think that in general using a copyrighted work to train an AI is a transformative use and therefore that it is permitted by law. Specific instances in which an AI outputs copyrighted text without any transformative modifications may still be copyright infringement They may also be fair use, in the way that copying a short excerpt from a longer document is fair use. I’m not a lawyer.
Anyway, if the courts rule against the AI companies, the enforcement of such a ruling would be disastrous for the ability for American companies to compete with international rivals who will still freely use the training data that American companies would no longer have access to. A law would be (or at least should be) passed to prevent that, although the tech companies might end up paying some nominal fee.