Lending Library ebooks on the Kindle?
It is already possible to read Overdrive MobiPocket Lending Library ebooks on the Kindle, but this is not authorized by Amazon. You have to use the kindlefix.py script (which does not remove DRM), and more importantly you have to provide the Kindle's MOBI PID to your lending library. Amazon regards this PID as a secret, although it is trivially easy to obtain.
All other EInk reading devices that support either MOBI or Adobe DRM (encryption) can read US lending library ebooks, although OverDrive provides MOBI and Adobe ebooks separately (so your selection depends on your library and your reading device).
Now that Sony is making a selling point out of library access, including wireless lending library access on its forthcoming Daily Edition, will Amazon change its tune? Note that it would require a very minor firmware change to allow MOBI lending library ebooks on the Kindles. To get them in the iPhone Kindle app would require server-side support (like Sony is apparently going to provide for its Touch Reader), but that might be what Amazon does for the Kindles too.
I think Amazon should have allowed lending library ebooks from day one. I'm not sure they ever will, partly because they are trying to kill off MobiPocket.