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I honestly can't see a library ever being liable for what a patron does with their library book. I've never heard of any sort of actual case that would indicate this is a risk. As far as I know not even the RIAA has attempted to sue libraries for kids copying music CDs they've checked out, but don't give them any ideas because I think that if they get whiff of a possibility they might try it the money grubbing jerks.
As for the privilege of "free" library books being revoked, please remember that library books are not free. I suspect that as long as customers demand eBooks libraries will attempt to fill that demand. I personally pay a little over $200 a year for my library use and every book that my library purchases on Overdrive is paid for ... with money ... usually at a price that is far higher than what Amazon charges for the same book.
I try to return my Overdrive books as soon as possible although I admit that I only found out a couple of months ago that you could return an Overdrive book early. I'm not great at reading directions I guess. I also set my check-out period to default to 7 days instead of 21 days because like you I've noticed those wait lists building like crazy.
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