Yes, that would be preservation. I don't think they'd have ever got in trouble for doing that, even if it was technically a copyright violation. Probably not even if they had some sort of limited "lending" system so that rare texts could be read by the few who were interested in them. The problem came when Internet Archive flung their gates wide and let everyone download freely, at that point they became a piracy site and got hammered like a piracy site. That's counter to their goal of simple preservation.